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BSB51415 Diploma of Project Management

BLOCK 2 TRAINING

Student Notes Version 1.0

BSB51415 Diploma of Project Management – Block 2 – Student Notes

Pro Leaders Academy Pty Ltd ~ www.proleaders.com.au Page 2 of 158

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Table of Contents

ABOUT PRO LEADERS ACADEMY ..................................................................................................... 2

ABOUT THIS DOCUMENT .................................................................................................................... 7

Program Objectives and Learning Outcomes ................................................................... 7

What is an Acceptable Standard for a Qualification at this Level? .................................... 8

Units of Competency and Learning Objectives ................................................................. 8

How you will be assessed............................................................................................... 15

Further reading ............................................................................................................... 16

PROJECT RISK MANAGEMENT ........................................................................................................ 17

Responsibility for Risk Management ............................................................................... 19

Risk Management as Opportunity Management ............................................................. 19

Risk Profiles ................................................................................................................... 19

Planning for Risk Management ....................................................................................... 20

Risk Management Process ............................................................................................. 21

Risk Identification ........................................................................................................... 22

Risk Analysis .................................................................................................................. 31

Risk Evaluation ............................................................................................................... 38

Risk Treatment ............................................................................................................... 38

Contingency Planning ..................................................................................................... 42

Benefits of Risk Management ......................................................................................... 43

Project Issue Management ............................................................................................. 43

Risk Tool ........................................................................................................................ 46

ORGANISATIONAL STRATEGY AND STRUCTURES ...................................................................... 50

Aligning Strategy with Projects ....................................................................................... 51

Project Managers and Organisational Strategy ............................................................... 51

Project Organisational Structures ................................................................................... 53

Influence of Organisational Structure on Projects ........................................................... 58

PROJECT HUMAN RESOURCE MANAGEMENT .............................................................................. 59

Leadership and Management ......................................................................................... 60

Managing Project Teams ................................................................................................ 61

Acquire Project Team ..................................................................................................... 63

Develop the Project Team .............................................................................................. 65

Manage Project Team .................................................................................................... 66

PROJECT GOVERNANCE .................................................................................................................. 70

Project governance roles ................................................................................................ 71



Causes of governance problems .................................................................................... 72

Effective Project Governance ......................................................................................... 73

Risk Management .......................................................................................................... 74

Change Control .............................................................................................................. 75

PROJECT COMMUNICATIONS MANAGEMENT ............................................................................... 79

Formal Communication Channels ................................................................................... 80

Customer Relationships ................................................................................................. 81

Communications Planning .............................................................................................. 82

Information Distribution ................................................................................................... 83

Performance Reporting .................................................................................................. 83

Manage Stakeholders ..................................................................................................... 84

Communications Strategy............................................................................................... 85

Managing Information ..................................................................................................... 87

Example of a Communication Matrix Template ............................................................... 87

PROJECT PROCUREMENT ................................................................................................................ 89

Procurement Plan ........................................................................................................... 90

Market Research and Analysis ....................................................................................... 92

Organisational Support ................................................................................................... 93

Steps in the Procurement Process ................................................................................. 94

Procurement Methods .................................................................................................... 95

Monopoly Providers ........................................................................................................ 96

Multi-Stage Procurement ................................................................................................ 97

Standing Offers .............................................................................................................. 97

Panel Arrangements ....................................................................................................... 98

Corporate Contracts ....................................................................................................... 98

Different Types of Requests for Offers............................................................................ 99

Statement of Requirement .............................................................................................. 99

Tender Evaluation Planning .......................................................................................... 101

The Tender Evaluation Report ...................................................................................... 105

Negotiation with Preferred Tenderer/s .......................................................................... 105

Notification ................................................................................................................... 105

MANAGE THE CONTRACT ............................................................................................................... 107

Analysing and Understanding the Contract ................................................................... 108

The Contract Management Plan ................................................................................... 108

Monitor and Maintain the Performance of a Contract .................................................... 109

Closure of a Successfully Completed Contract ............................................................. 111



PROJECT MANAGEMENT INTEGRATION ...................................................................................... 113

What is Project Integration Management? .................................................................... 114

Core and Facilitating Functional Areas ......................................................................... 115

Phases and Phase-Gates ............................................................................................. 116

Integrated Change Control ........................................................................................... 117

PROJECT CLOSURE AND AUDIT .................................................................................................... 121

Conditions for Project Closure ...................................................................................... 122

Project Closure Process ............................................................................................... 123

Acceptance Process ..................................................................................................... 125

Close-Out Meeting........................................................................................................ 125

Project Evaluation ........................................................................................................ 126

The Final Report ........................................................................................................... 126

Archiving ...................................................................................................................... 128

Celebrate ...................................................................................................................... 129

Post Project Evaluation/Audit ....................................................................................... 129

MANAGE PROJECT GOVERNANCE ............................................................................................... 131

What is Project Governance? ....................................................................................... 132

Causes of governance problems .................................................................................. 133

Risk management ........................................................................................................ 133

LEAD AND MANAGE TEAM EFFECTIVENESS............................................................................... 135

Establish Team Performance Plan ............................................................................... 136

Develop a common understanding ............................................................................... 136

Develop performance plans .......................................................................................... 139

Support team members to meet expected performance outcomes ............................... 143

Develop and facilitate team cohesion ........................................................................... 145

Facilitate teamwork....................................................................................................... 148

Encourage participation ................................................................................................ 148

Support the team to resolve work performance problems ............................................. 154

Be a role model for others ............................................................................................ 154

Liaise with stakeholders ............................................................................................... 155

Evaluate and take necessary corrective ....................................................................... 158

List of Tables

Table 1 - Influence of Organisational Structure on Projects .......................................................... 58



List of Figures

Figure 1 – Risk Management Process ISO 31000A ......................................................................... 21

Figure 2 – Measures of Likelihood of Occurrence .......................................................................... 33

Figure 3 – Measures of Consequences ............................................................................................ 34

Figure 4 – Example of a Qualitative Risk Analysis .......................................................................... 35

Figure 5 – Example of a basic semi-quantitative risk rating matrix .............................................. 36

Figure 6 - Functional Organisation ................................................................................................... 54

Figure 7 - Pure Project Organisation ................................................................................................ 55

Figure 8 - Matrix Organisation ........................................................................................................... 56

Figure 9 - Levels of effort over the Project Life Cycle ..................................................................... 62

Figure 10 -Tuckman’s model of group development ...................................................................... 67

Figure 11 -Stage Team Development Model..................................................................................... 68

Figure 12 Change Control .................................................................................................................. 77

Figure 13 Change Control System .................................................................................................... 78

Figure 14 – Formal Communication Channels................................................................................. 80

Figure 15 – Performance Reporting Process ................................................................................... 84

Figure 16 – Traffic Light Reporting ................................................................................................... 86

Figure 17 Project Integration Management .................................................................................... 114

Figure 18 Gate Reviews .................................................................................................................... 117

Figure 19 Change Control Process ................................................................................................. 118

Figure 20 Change Control ................................................................................................................ 119

Figure 21 Change Control System .................................................................................................. 120

Figure 22 – Performance Cycle ....................................................................................................... 140

Figure 23 – Smart Goals ................................................................................................................... 142

Figure 24 – Communication channels ............................................................................................ 149



About this Document This document forms part of the complete Student Notes for BSB51415 Diploma of Project

Management. The content in this manual covers the theory for all performance criteria listed

in the competency along with the associated elements for the following units of competency:

▪ BSBPMG517 – Manage Project Risk;

▪ BSBPMG515 – Manage Project Human Resources;

▪ BSBPMG520 – Manage Project Governance;

▪ BSBPMG516 – Manage Project Information and Communication;

▪ BSBPMG518 – Manage Project Procurement;

▪ BSBPMG521 – Manage Project Integration; and

▪ BSBWOR502 – Lead and manage team effectiveness.

It also includes particular information and tools such as case studies, checklists and

questionnaires that will ensure your learning is strongly grounded in practical understanding

and application.

These Student Notes are designed to assist you in developing the skills and knowledge

necessary to achieve the Diploma of Project Management qualification. Throughout these

notes, you will find information, further recommended reading, case studies and activities

which are deliberately structured to assist your learning. Much of the information in these

notes has been sourced from commonly available Project Management guidance –

especially the Project Management Body of Knowledge (PMBOK). The sources have been

listed in the references and bibliography section and are recommended as further reading.

The instructions and procedures described in this training program are provided for training

purposes only; they do not replace or take precedence over either the procedures or

instructions issued by your organisation, or relevant legislation. You should ensure that you

are familiar with any legislation, policies, procedures or other guidelines that apply within

your organisation.

Program Objectives and Learning Outcomes

This qualification reflects the role of individuals who apply project management skills and

knowledge. They may manage projects in a variety of contexts, across a number of industry

sectors, they may be in project leadership and management roles, and they are responsible

for achieving project objectives. They possess a sound theoretical knowledge base and use

a range of specialised, technical and managerial competencies to initiate, plan, execute and

evaluate their own work and/or the work of others.

This program addresses procurement planning and tender evaluation activities of a complex

nature and the development and distribution of requests for offer and contracts. It includes

information about the identification, management and treatment strategies that will support

an effective procurement outcome.



On completion of this program, participants will be able to:

▪ manage project scope;

▪ manage project budgets;

▪ manage project quality;

▪ manage risk;

▪ manage project human resources;

▪ manage project stakeholder engagement;

▪ manage project governance;

▪ manage project communication;

▪ manage project procurement and contracts;

▪ manage project integration and closure; and

▪ effectively lead and manage individuals and teams.

What is an Acceptable Standard for a Qualification at this Level?

The Diploma is a qualification that requires breadth, depth and complexity of knowledge

covering a broad range of varied activities or application in a wider variety of contexts most

of which are complex and non-routine.

Leadership and guidance are involved when organising the activity of self and others as well

as contributing to technical solutions of a non-routine or contingency nature. Performance of

a broad range of skilled applications including requirements to evaluate and analyse current

practices, develop new criteria and procedures for performing current practices are also

required.

You should have this standard in mind as you complete the readings and exercises set for

this program.

Units of Competency and Learning Objectives

Training packages are sets of nationally endorsed competency standards and qualifications

used to recognise and assess people’s skills. They are developed by national skills councils

in consultation with industry, employers, enterprises and education providers to meet the

identified training needs of specific industries or industry sectors. To gain national

endorsement, developers must provide evidence of extensive consultation and support

within the industry area or enterprise.

Within each training package a number of core and elective competencies are grouped

together to form nationally endorsed qualifications. For more information about training

packages, visit www.training.gov.au.

These Student Notes cover elements of the following Units of Competency from BSB51415

Diploma of Project Management qualification and will be assessed against the same units

from the Business Services Training Package:

http://www.training.gov.au/



▪ BSBPMG511 – Manage Project Scope;

▪ BSBPMG512 – Manage Project Time;

▪ BSBPMG513 – Manage Project Quality;

▪ BSBPMG514 – Manage Project Costs;

▪ BSBPMG515 – Manage Project Human Resources;

▪ BSBPMG516 – Manage Project Information and Communication;

▪ BSBPMG517 – Manage Project Risk;

▪ BSBPMG518 – Manage Project Procurement;

▪ BSBPMG519 – Manage Project Stakeholder Engagement;

▪ BSBPMG520 – Manage Project Governance;

▪ BSBPMG521 – Manage Project Integration; and

▪ BSBWOR502 – Lead and manage team effectiveness.

About the Units of Competency

Each unit of competency consists of elements and performance criteria that identifies what

you can do within the workplace and how you can be assessed as competent. These

assessments against each unit of competency are counted towards a qualification from

Business Services Training Package.

This qualification reflects the role of individuals who apply project management skills and

knowledge. They may manage projects in a variety of contexts, across a number of industry

sectors. They have project leadership and management roles and are responsible for

achieving project objectives. They possess a sound theoretical knowledge base and use a

range of specialised, technical and managerial competencies to initiate, plan, execute and

evaluate their own work and/or the work of others.

Therefore, the following elements and performance of related competency units from the

BSBPMG517 - Manage Project Risk

This unit provides the skills and knowledge required to manage risks that may impact

achievement of project objectives and involves identifying, analysing, treating and monitoring

project risks and assessing risk management outcomes.

Elements Performance criteria

1. Identify project risks 1.1. Determine risk objectives and standards, with input from stakeholders

1.2. Establish project risk context to inform risk management processes

1.3. Identify project risks using valid and reliable risk identification methods

1.4. Classify project risks within agreed risk categories



2. Analyse project risks 2.1. Determine risk analysis classification criteria and apply to agreed risk ranking system

2.2. Use risk analysis processes, within delegated authority, to analyse and qualify risks, threats and opportunities

2.3. Determine risk priorities in agreement with project client and other stakeholders

2.4. Document risk analysis outcomes for inclusion in risk register and risk management plan

3. Establish risk treatments and controls

3.1. Identify and document existing risk controls

3.2. Consider and determine risk treatment options using agreed consultative methods

3.3. Record and implement agreed risk treatments

3.4. Update risk plans and allocate risk responsibilities to project team members

4. Monitor and control project risks

4.1. Establish regular risk review processes to maintain currency of risk plans

4.2. Regularly monitor risk environment to identify changed circumstances impacting project risks

4.3. Determine risk responses to changed environment

4.4. Implement agreed risk responses and modify plans to maintain currency of risk treatments and controls

5. Assess risk management outcomes

5.1. Review project outcomes to determine effectiveness of risk-management processes and procedures

5.2. Identify and document risk management issues and recommended improvements for application to future projects

BSBPMG515 - Manage Project Human Resources

This unit provides the skills and knowledge required to manage human resources related to

projects, and involves planning for human resources, implementing personnel training and

development, and managing the project team.


1. Plan human resources relevant to projects

1.1. Determine resource requirements for individual tasks to determine required project personnel levels and competencies

1.2. Establish project organisation and structure to align individual and group competencies with project tasks

1.3. Allocate personnel to the project to meet planned work outputs throughout project timeline

1.4. Apply human resources management (HRM) methods, techniques and tools to support engagement and performance of personnel

2. Implement project personnel training and development

2.1. Negotiate, define and communicate clear project role descriptions



2.2. Identify, plan and implement ongoing development and training of project team members to support personnel and project performance

2.3. Measure individuals' performance against agreed criteria and initiate actions to overcome shortfalls in performance

3. Lead project team 3.1. Implement processes and take action to improve individual performance and overall project effectiveness

3.2. Monitor and report, for remedial action, internal and external influences on individual and project team performance and morale

3.3. Implement procedures for interpersonal communication, counselling, and conflict resolution to maintain a positive work environment

3.4. Identify and manage inter-project and intra-project resource conflict to minimise impact on achievement of project objectives

4. Finalise human resource activities related to projects

4.1. Disband project team according to organisational policies and procedures

4.2. Identify and document human resource issues and recommended improvements

BSBPMG520 - Manage Project Governance

This unit provides the skills and knowledge required to establish and implement project

governance, and involves identifying, applying, monitoring and reviewing project

governance.


1. Identify project management structure

1.1. Determine organisational governance policies, procedures and expectations of project stakeholders

1.2. Negotiate clear and discrete project governance roles and responsibilities with relevant authorities

1.3. Establish delegated authorities for project decision-making

1.4. Identify and record differences between the organisation s functional authorities and project authorities

1.5. Adopt, document and communicate unambiguous governance plan to relevant stakeholders

2. Apply project governance policies and procedures

2.1. Distribute and present information on governance planning to project team and other relevant stakeholders and ensure common understanding

2.2. Include delegated authorities within role and project position descriptions

2.3. Moderate conflicts regarding roles, responsibilities and authorities to support achievement of project objectives

2.4. Regularly report to the organisation and project authorities on performance and issues arising from governance arrangements



3. Monitor and review project governance

3.1. Analyse and review project governance impact on achieving project objectives

3.2. Document lessons learned and recommendations to assist future projects

BSBPMG516 - Manage project information and communication

This unit provides the skills and knowledge required to link people, ideas and information at

all stages in the project life cycle. Project communication management ensures timely and

appropriate generation, collection, dissemination, storage and disposal of project information

through formal structures and processes.


1. Plan information and communication processes

1.1. Identify, analyse and document information requirements, with input from stakeholders, as the basis for communication planning

1.2. Develop, within delegated authority, an agreed communication management plan to support achievement of project objectives

1.3. Establish and maintain a designated project-management information system to ensure quality, validity, timeliness and integrity of information and communication

2. Implement project information and communication processes

2.1. Manage generation, gathering, storage, retrieval, analysis and dissemination of information by project staff and stakeholders

2.2. Implement, modify, monitor and control designated information-validation processes to optimise quality and accuracy of data

2.3. Implement and maintain appropriate communication networks

2.4. Identify and resolve communication and information-management system issues

3. Assess information and communication outcomes

3.1. Finalise and archive records according to agreed project information ownership and control requirements

3.2. Review project outcomes to determine effectiveness of management information and communication processes and procedures

3.3. Identify and document lessons learned and recommended improvements for application in future projects

BSBPMG518 - Manage Project Procurement

This unit provides the skills and knowledge required to undertake procurement in projects.


1. Determine procurement requirements

1.1. Identify procurement requirements with input from stakeholders as basis for procurement planning

1.2. Establish and maintain, within delegated authority, agreed procurement management plan



2. Establish agreed procurement processes

2.1. Obtain information from suppliers capable of fulfilling procurement requirements

2.2. Determine or adopt established selection processes and selection criteria, and communicate to vendors to ensure transparency

2.3. Obtain relevant approvals for procurement processes to be used

3. Conduct procurement activities

3.1. Identify and act according to probity and project governance constraints

3.2. Communicate agreed proposals and/or specifications to prospective vendors to ensure clarity of understanding of project objectives

3.3. Solicit vendor responses according to proposal requirements

3.4. Evaluate responses and select preferred vendors according to current legal requirements and agreed selection criteria

3.5. Negotiate with preferred contractor or supplier, to agree on terms and conditions of supply

4. Implement and monitor procurement

4.1. Implement established procurement management plan and make modifications in line with agreed delegations

4.2. Review progress and manage agreed variations to ensure timely completion of tasks and resolution of conflict within the legal framework of the supply agreement

4.3. Identify and report procurement management issues and implement agreed remedial actions to ensure project objectives are met

5. Manage procurement finalisation procedures

5.1. Conduct finalisation activities to ensure vendor deliverables meet contracted requirements

5.2. Review project outcomes using available procurement records and information to determine effectiveness of procurement processes and procedures

5.3. Document lessons learned and recommended improvements for application to future projects

BSBPMG521 - Manage Project Integration

This unit provides the skills and knowledge required to integrate and balance overall project

management functions of scope, time, cost, quality, human resources, communications, risk

and procurement across the project life cycle; and to align and track project objectives to

comply with organisational goals, strategies and objectives.


1. Establish project 1.1. Identify, clarify and prepare project initiation documentation

1.2. Identify relationship between the project and broader organisational strategies and goals

1.3. Negotiate and document project objectives, outcomes and benefits



1.4. Negotiate project governance structure with relevant authorities and stakeholders

1.5. Prepare and submit project charter for approval by relevant authorities

2. Undertake project planning and design processes

2.1. Establish and implement a methodology to disaggregate project objectives into achievable project deliverables

2.2. Identify project stages and key requirements for stage completion against client requirements and project objectives

2.3. Analyse project management functions to identify interdependencies and impacts of constraints

2.4. Develop a project management plan that integrates all project-management functions with associated plans and baselines

2.5. Establish designated mechanisms to monitor and control planned activity

2.6. Negotiate approval of project plan with relevant stakeholders and project authority

3. Execute project in work environment

3.1. Manage the project in an established internal work environment to ensure work is conducted effectively throughout the project

3.2. Maintain established links to align project objectives with organisational objectives throughout the project

3.3. Within authority levels, resolve conflicts negatively affecting attainment of project objectives

4. Manage project control 4.1. Ensure project records are updated against project deliverables and plans at required intervals

4.2. Analyse and submit status reports on project progress and identified issues with stakeholders and relevant authorities

4.3. Analyse and submit impact analysis of change requests for approval, where required

4.4. Maintain relevant project logs and registers accurately and regularly to assist with project audit

4.5. Ensure associated plans are updated to reflect project progress against baselines and approved changes

5. Manage project finalisation

5.1. Identify and allocate project finalisation activities

5.2. Ensure project products and associated documentation are prepared for handover to client in a timely manner

5.3. Finalise financial, legal and contractual obligations

5.4. Undertake project review assessments as input to future projects

BSBWOR502 – Lead and manage team effectiveness

This unit covers the competencies required to lead teams in the workplace and to work

effectively with management and other stakeholders within the organisation. This unit is

ideal for those working in managerial positions who work with teams.




1. Establish team performance plan

1.1. Consult team members to establish a common understanding of team purpose, roles, responsibilities and accountabilities in accordance with organisational goals, plans and objectives

1.2. Develop performance plans to establish expected outcomes, outputs, key performance indicators (KPIs) and goals for work team

1.3. Support team members in meeting expected performance outcomes

2. Develop and facilitate team cohesion

2.1. Develop strategies to ensure team members have input into planning, decision making and operational aspects of work team

2.2. Develop policies and procedures to ensure team members take responsibility for own work and assist others to undertake required roles and responsibilities

2.3. Provide feedback to team members to encourage, value and reward individual and team efforts and contributions

2.4. Develop processes to ensure that issues, concerns and problems identified by team members are recognised and addressed

3. Facilitate teamwork 3.1. Encourage team members and individuals to participate in and to take responsibility for team activities, including communication processes

3.2. Support the team in identifying and resolving work performance problems

3.3. Ensure own contribution to work team serves as a role model for others and enhances the organisation’s image for all stakeholders

4. Liaise with stakeholders

4.1. Establish and maintain open communication processes with all stakeholders

4.2. Communicate information from line manager/management to the team

4.3. Communicate unresolved issues, concerns and problems raised by team members and follow-up with line manager/management and other relevant stakeholders

4.4. Evaluate and take necessary corrective action regarding unresolved issues, concerns and problems raised by internal or external stakeholders

You will find detailed information relating to each performance criterion as you work through

this book but if you are unclear about what is expected of you, please seek clarification from

your facilitator as soon as possible.

How you will be assessed

There are a variety of assessment options available to you depending on how and where

you are studying. As well as completing the activities and case studies throughout this book,



you may be asked to compile a portfolio of evidence, complete a workplace project or case

study and answer questions relating to your learning. Your facilitator and/or assessor will

discuss these options with you.

Further reading

Although you will find all the information that you should need to complete the competency

within this book, you may wish to refer to the list of references at the end of the student

notes to broaden your knowledge and for help when completing projects and case studies.



Project Risk Management



The purpose of risk management is to ensure levels of risk and uncertainty are

properly managed, so that the project is completed successfully. Risk

management identifies as many risk events as possible, minimises their impact,

manages responses to those events that do materialise and provides

contingency funds to cover risk events that actually materialise.

The International Organisation for Standardisation (ISO) in the publication ISO 31000:2009

defines risk as “the effect of uncertainty on objectives”. Other definitions include:

Hazard: a source of danger, a possibility of incurring loss or misfortune,

probability or threat of a damage, injury, liability, loss, or other negative

occurrence, caused by external or internal vulnerabilities.

Projects are executed in an environment of uncertainty. No amount of planning can

overcome risk, or the inability to control chance events. In the context of projects, risk is an

uncertain event or condition that, if it occurs, has a positive or negative effect on project

objectives. A risk has a cause and, if it occurs, a consequence. Some potential risk events

can be identified before the project starts - such as equipment malfunction or change in

technical requirements. Risks can be anticipated consequences, like schedule slippages or

cost overruns. The chances of a risk event occurring are greatest in the early phases of a

project. The cost impact of a risk event in the project is less if the event occurs earlier rather

than later. The early stages of a project represent the period when the opportunity for

minimising the impact or working around a potential risk exists. Conversely, as the project

passes the halfway mark, the cost of a risk event occurring increases rapidly.

Risk refers to any factor (or threat) that may affect adversely the successful completion of

the project in terms of delivery of its outputs or adverse effects on resourcing, time, cost and

quality. These factors/threats include risks to the project’s business environment that may

prevent the project’s outcomes/benefits from being realised fully. For project managers, risk

can mean failure, but the reward can mean a time or cost saving, as well as other benefits.

Risk planning is the process of defining potential risks and the ways in which the project

manager will both mitigate their occurrence and respond if they actually occur. The result of

this work is called a risk management plan: the comprehensive manner in which the project

will identify and plan for how to deal with risk. The objectives of risk management are to

increase the probability and impact of positive events and decrease the probability and

impact of negative events in the project.

Certainty is defined as a condition where a specific outcome will occur. In all

projects there is no absolute certainty of outcome.



Responsibility for Risk Management

All project managers are accountable for the implementation and maintenance of sound risk

management processes, within their areas of responsibility. Project managers are also

responsible for creating an environment where staff on their team recognise and accept their

personal responsibilities to support risk management.

Sound risk management policy suggests that an objective of establishing a risk management

framework is to create an environment where all project team members will assume

responsibility for managing risk. All staff should be familiar with the risk management model

and its application within their areas of responsibility.

Risk Management as Opportunity Management

Risk management is not a negative activity. It should not deal exclusively with efforts to

control potential harm although this is usually where the process of risk management is

(sometimes exclusively) focused.

Risk management is also about assessing opportunities and seizing those opportunities

where the risk involved is assessed as worth taking. For example, building in some flexibility

to project and procurement plans which allows for the possible incorporation of future

technological developments. In making a decision to accept and manage risk, an

organisation must consider:

▪ The possible gains to be made through a successful action

▪ The loss which would be the consequence of not taking and/or taking the action.

The possible opportunities can be grouped under four headings, they are:

▪ Exploit. This may be selected for risks with positive impacts where the organisation

wishes to ensure the opportunity is realised;

▪ Share. Sharing a positive risk involves allocating some or all of the ownership of the

opportunity to another party who is best able to capture the opportunity for the benefit

of the project (for example, a contractor may be better positioned to capitalise on any

Intellectual Property that they develop for the Project);

▪ Enhance. This is used to increase the probability and/or the positive impacts of an

opportunity. Identifying and maximising key drivers of these positive-impact risks may

increase the probability of their occurrence; and

▪ Accept. Accepting an opportunity is being willing to take advantage of it if it comes

along, but not actively pursuing it.

Risk Profiles

People can often be identified in one of three paradigms, depending upon their attitude to

risk. These are:



▪ Risk Seeking - an active and high tolerance for risk. Information is sought and

decisions taken to accept (manage) risky events and the consequences.

Experimentation is the principal focus.

▪ Risk Averse - a low tolerance for risk. Information is sought and decisions taken to

avoid risky events and the consequences. Caution is the principal focus.

▪ Risk Neutral - a neutral tolerance for risk. Information is sought and decisions taken

to manage risky events and the consequences. Balance between risk and payoff is

the chief focus.

Planning for Risk Management

Risk management is not meant to kill off projects and not dampen levels of investment. Its

aims are to:

▪ Ensure that only worthwhile projects proceed;

▪ Excessive cost overruns are avoided (or minimised); and

▪ Keep projects on track during their life cycle.

Risk management planning is about making decisions. The project manager, the project

team, and other key stakeholders are involved to determine the risk management process.

The risk management process is conducted in relation to the scope of the project, the priority

of the project within the organisation, and the impact of the project deliverables. For a

simple, low impact project the level of planning would not be the same as for a high priority

complex project.

Organisational Policy

Most organisations have a pre-defined approach to risk management. The policies can

define the activities to initiate, plan, and respond to risk. The project manager must map the

project risk management to these policies to conform to the organisation’s requirements. In

addition to organisational policies there may also be predefined roles and responsibilities

within an organisation. These roles could impact on risk management planning, the

decisions relevant to the risks, and the involvement of the project participants. These roles

and responsibilities and the policies associated with working with these individuals should be

identified and considered early in the project process to save time and frustration. The last

component for the project manager to understand within the organisational context is the

limit of power and autonomy they have on the project.

Stakeholder Tolerance

Depending on the project, the conditions, and the potential for loss or reward, stakeholders

will have differing tolerances for risk. A person’s willingness to accept risk is known as the

utility function. The time and money costs required to eliminate the chance of failure is in

proportion to the stakeholders’ tolerance of risk on the project. The cost of assuring there are

no threats must be balanced with the confidence that the project can be completed without

extraordinary costs.



Work Breakdown Structure

The work breakdown structure can assist in risk planning as it helps to identify the

components of a project and what risks may be unique to a particular area of the project as

opposed to a risk shared across the entire project.

Other Categories of Risk

Some other questions to help establish the context of the project and the feasibility of

commencing the project are listed below:

▪ Market Risk. Will the new product be useful to the organisation or marketable to

others? Will users accept and use the product or service?

▪ Financial Risk. Can the organisation afford to undertake the project? Is this project

the best way to use the organisation’s financial resources?

▪ Technology Risk. Is the project technically feasible? Could the technology be

obsolete before a useful product can be produced?

Risk Management Process

There are seven steps in a comprehensive risk management process. Figure 33 shows

these steps and their inter-relationship.

FIGURE 1 – RISK MANAGEMENT PROCESS ISO 31000A

Establish the Context

This step involves establishing the external, internal and risk management context in which

the rest of the process will take place. The context includes the objectives and criteria of the

project and how it fits into the objectives of the organisation as a whole.



External Context

The external context is the external environment in which the organisation seeks to achieve

its objectives. Understanding the external context is important in ensuring that the objectives

and concerns of external stakeholders are considered when developing risk criteria. Some of

the issues to be considered within the external context include:

▪ political, legal, regulatory, financial and technological;

▪ key drivers and trends having an impact on the objectives of the organisation; and

▪ relationships with, perceptions and values of external stakeholders.

Internal Context

The internal context is the internal environment in which the organisation seeks to achieve

its objectives. The risk management process should be aligned with the organisation’s

culture, process, structure and strategy. Some of the issues to be considered within the

internal context include:

▪ governance, organisational structure, roles and accountabilities;

▪ the relationships with and perceptions and values of internal stakeholders; and

▪ the organisation’s culture.

Risk Identification

Risk identification is the process of determining which risks may affect the project

and documenting their characteristics

The risk management process begins by trying to generate a list of all possible risks that

could affect the project (a Risk Tool which may help to identify risks has been included at the

end of this Chapter). It is a proactive approach rather than reactive. The project should

identify sources of risk, areas of impact, events (including changes in circumstances) and

their causes and their potential consequences. The aim of this step is to generate a

comprehensive list of risks based on those events that might create, enhance, prevent,

degrade, accelerate or delay the achievement of the project objectives. It is important to

identify the risks associated with not pursuing an opportunity. Comprehensive identification

is critical, because a risk that is not identified at this stage will not be included in further

analysis.

It is usually better to start with risks associated with the whole project rather than one

specific section. After the macro risks have been identified, specific work areas can be

checked. The effective tool to identify specific risks is the WBS (as discussed previously).

It is important that all stakeholders involved in the conduct of the project provide some level

of input into the risk identification process. Participants in risk identification activities can

include the following: project manager, project team members, customers, subject matter

experts from outside the project team, end users, other project managers, stakeholders, and

risk management experts. Their involvement assists with the detailed identification of the



inherent risks involved in the project and develops a sense of ownership and responsibility

towards the Risk Management Plan.

The identification of risk is an iterative process because new risks may evolve or become

known to the project as it progresses through its life cycle. The frequency of iteration and

who participates in each cycle will vary by situation.

Tools and Techniques

Some techniques for identifying risk include:

▪ Brainstorming – goal is to obtain a comprehensive list of project risks;

▪ Checklist Analysis – risk identification checklist can be developed based on

historical information and knowledge from similar projects;

▪ SWOT Analysis – examines the project from each of the SWOT (strengths,

weaknesses, opportunities and threats) perspectives;

▪ Expert Judgement – risks can be identified by experts with relevant experience of

similar projects;

▪ Project Team - personal experience of project team members;

▪ Other Projects - examining local or overseas experience in similar projects;

▪ Historical Information - if the organisation has done similar projects in the past, the

historical information should be able to shed light on the risks identified early in the

project, as well as risks identified throughout the project and provide information in

the final reports; and

▪ Examine the Assumptions - assumption analysis is the process of analysing the

project assumptions to see what risks may stem from false assumptions.

Risk Register

Once identified, risks must be recorded. The outputs from the identification of risk are the

initial entries into the risk register. The risk register ultimately contains the outcomes of the

other risk management processes as they are conducted, resulting in an increase in the

level and type of information contained in the risk register over time. This record should be

continually reviewed as part of the ongoing risk management process. An example of a risk

register format is provided below.

BSB51415 Diploma of Project Management – Student Notes


Risk Templates and Examples

Risk Register Template

RISK REGISTER (Adapted from AS/NZS 4360:2004 Companion Guidelines)

Function/Activity: __________________________________________ Date of Risk Review: _______________________________________

Compiled by: _____________________________________________ Date: ___________________________________________________

Reviewed by: _____________________________________________ Date: ___________________________________________________

Ref Risk

What can happen?

How can it happen?

Adequacy of existing controls Likelihood Rating

Consequence Rating

Level of Risk Risk Priority Treat?

(Y/N)



Risk Register Example

RISK REGISTER (example) (Adapted from AS/NZS 4360:2004 Companion Guidelines)

Function/Activity: Health and Safety Review _____________________ Date of Risk Review: 28/01/2013 _____________________________

Compiled by: Bea Sting _____________________________________ Date: 01/02/2013 _________________________________________

Reviewed by: Ella Mentry ___________________________________ Date: 15/02/2013 _________________________________________

Ref Risk

What can happen?

How can it happen?

Adequacy of existing controls Likelihood Rating

Consequence Rating

Level of Risk Risk Priority Treat?

(Y/N)

1 Incorrect safety processes followed causing injury.

Inadequate – outdated job procedures exist

Possible Catastrophic High 2 Y

2 Equipment fault/failure causes staff injuries.

Inadequate – equipment may be out of maintenance period

Possible Catastrophic High 1 Y

3 Organisation is in breach of legislative requirements and fined.

No controls Possible Major High 3 Y



Risk Treatment Schedule and Plan Template

RISK TREATMENT SCHEDULE AND PLAN (Adapted from AS/NZS 4360:2004 Companion Guidelines)

Function/Activity: __________________________________________ Date of Risk Review: ______________________________________

Compiled by: _____________________________________________ Date: ___________________________________________________

Reviewed by: _____________________________________________ Date: ___________________________________________________

Risks in Priority Order

(from Risk Register)

Possible Treatment Options

Preferred Options

Risk Rating after

Treatment

Cost Benefit Assessment Person or position

responsible Timetable

How will this risk and its treatment be monitored?

ACCEPT REJECT



Risk Treatment Schedule and Plan Example

RISK TREATMENT SCHEDULE AND PLAN (example for highest rated risk) (Adapted from AS/NZS 4360:2004 Companion Guidelines)

Function/Activity: Health and Safety Review _____________________ Date of Risk Review: 28/01/2013 _____________________________

Compiled by: Bea Sting _____________________________________ Date: 01/02/2013 _________________________________________

Reviewed by: Ella Mentry ___________________________________ Date: 15/02/2013 _________________________________________

Risks in Priority Order

(from Risk Register)

Possible Treatment Options

Preferred Options

Risk Rating after

Treatment

Cost Benefit Assessment

Person or position

responsible Timetable

How will this risk and its treatment be monitored?

ACCEPT REJECT

2 • Stocktake to determine equipment needs

• Inventory equipment condition

• Research to determine whether equipment is obsolete

✓

✓

✓

Medium ✓

✓

✓

See Attached Cost - Benefit Analysis

Property Manager

Health and Safety Rep

Immediate, followed by quarterly checks (on equipment that is out of manufacturer maintenance period), commencing on review outcome approval

• Near miss and injury reports

• Equipment condition reports

• Market research

• Industry Association warnings



Risk Action Plan Template

RISK ACTION PLAN (Adapted from AS/NZS 4360:2004 Companion Guidelines) ITEM OF RISK: REFERENCE:

SUMMARY – RECOMMENDED RESPONSE AND IMPACT

ACTION PLAN

1. PROPOSED ACTIONS

2. RESOURCES REQUIREMENTS

3. RESPONSIBILITIES

4. TIMING

5. REPORTING AND MONITORING REQUIRED

6. OTHER REMARKS

COMPILER: DATE:

REVIEWER: DATE:



Risk Action Plan Example

RISK ACTION PLAN (example) (Adapted from AS/NZS 4360:2004 Companion

Guidelines) ITEM OF RISK: Equipment fault/failure REFERENCE: 2

SUMMARY – RECOMMENDED RESPONSE AND IMPACT

The risk has been identified that older and unmaintained equipment may fail or malfunction during operation, causing injury to staff. Action is required to identify and where necessary remove or replace equipment.

ACTION PLAN

1. PROPOSED ACTIONS

• Stocktake existing equipment (when purchased and condition)

• Identify maintenance/warranty management (ongoing or lapsed)

• Market research about existing equipment and needs (obsolete? Safer equipment available?)

• Decommission/remove problem equipment

2. RESOURCES REQUIREMENTS

• Access to Asset Manager, Property/Facilities Manager, Line Managers of areas equipment is

used in, Contract Managers, Procurement Officials

3. RESPONSIBILITIES

• Asset Manager – to review equipment information on asset register

• Property Manager – applicable physical review of equipment

• Senior Operations Manager, Line Managers/Contract managers/procurement officials – actual

maintenance history, review of procurement plans, contract management plans and disposal

plans to determine recommended action

4. TIMING

• Immediate review of register, equipment, contracts and plans with immediate decommissioning

where necessary

• Timely review of need and market options with ASAP replacement of critical equipment.

5. REPORTING AND MONITORING REQUIRED

Monitor initiation of actions by Risk Owners (Bea and Ella) and report outcomes.

6. OTHER REMARKS

Equipment stocktake will target ‘higher risk’ equipment first (specialists may need to be sought on an ‘as-needs’ basis’ to assess equipment). Procurement of new equipment will not occur without correct process approvals.

COMPILER: Bea Sting DATE: 01/02/2013

REVIEWER: Ella Mentry DATE: 15/02/2013



CASE STUDY: Mars Climate Orbiter

The cost of mismanaged risk control is

highlighted by the ill-fated 1999 NASA Mars

Climate Orbiter (MCO). The $125 million

orbiter approached Mars at too low an

altitude and burned up in the planet’s

atmosphere.

Initial Review

A failure to recognise and correct an error in a transfer of information between

the Mars Climate Orbiter spacecraft team in Colorado and the mission navigation

team in California led to the loss of the spacecraft last week, preliminary findings

by NASA's Jet Propulsion Laboratory internal peer review indicated.

"People sometimes make errors," said Dr. Edward Weiler, NASA's Associate

Administrator for Space Science. "The problem here was not the error, it was the

failure of NASA's systems engineering, and the checks and balances in our

processes to detect the error. That's why we lost the spacecraft."

The peer review preliminary findings indicate that one team used English units

(e.g., inches, feet and pounds) while the other used metric units for a key

spacecraft operation. This information was critical to the manoeuvres required to

place the spacecraft in the proper Mars orbit.

"Our inability to recognise and correct this simple error has had major

implications," said Dr. Edward Stone, director of the Jet Propulsion Laboratory.

Formal Review

The board recognises that mistakes occur on spacecraft projects, the report said.

However, sufficient processes are usually in place on projects to catch these

mistakes before they become critical to mission success. Unfortunately for MCO,

the root cause was not caught by the processes in place in the MCO project.

The failure board's first report identifies eight contributing factors that led directly

or indirectly to the loss of the spacecraft. These contributing causes include

inadequate consideration of the entire mission and its post-launch operation as a

total system, inconsistent communications and training within the project, and

lack of complete end-to-end verification of navigation software and related

computer models.

"The 'root cause' of the loss of the spacecraft was the failed translation of English

units into metric units in a segment of ground-based, navigation-related mission

software, as NASA has previously announced," said Arthur Stephenson,

chairman of the Mars Climate Orbiter Mission Failure Investigation Board. "The

failure review board has identified other significant factors that allowed this error

to be born, and then let it linger and propagate to the point where it resulted in a

major error in our understanding of the spacecraft's path as it approached Mars”.



Risk Analysis

Risk analysis involves consideration of the causes and sources of risk, their

positive and negative consequences, and the likelihood that those consequences

can occur.

Risk analysis involves developing an understanding of the risk. Risk analysis provides an

input to risk evaluation and to decisions on whether risks need to be treated, and on the

most appropriate risk treatment strategies and methods. It allows the project manager to

separate the minor acceptable risks from the major unacceptable risks and to provide

information to assist in the evaluation and treatment of risks.

Factors that affect consequences and likelihood should be identified. The analysis should

consider the range of potential consequences and how likely these consequences are to

occur during the management of the project. Consequence and likelihood may be combined

to give an estimated level of risk. This is often performed by using a risk assessment matrix

(see below). A consequence is defined as ‘the outcome of an event expressed qualitatively

or quantitatively, being a loss, injury, disadvantage or gain. There may be a range of

possible outcomes associated with the event.’

The term likelihood is used as a ‘qualitative description of probability or frequency’. The

matrix is typically divided into red, yellow and green zones representing major, moderate and

minor risks. The red zone is centred on the top right corner of the matrix (high likelihood/high

consequence) while green is centred on the bottom left corner (low likelihood/low

consequence). Since consequence is generally considered more important than likelihood,

the red zone extends further down the consequence column.

The risk assessment matrix provides a basis for prioritising which risks to address. Red

risks receive first priority followed by the yellow risks and the green risks last. The risk

assessment matrix is one of many approaches to risk assessment. Basically, assessments

are either subjective or quantitative. “Expert opinion” or “gut feeling” estimates are used the

most, but they can carry serious errors depending on the skill of the person(s) making the

judgement call. Quantitative methods usually require more detailed analysis of fact and tend

to be more reliable. Whether a subjective or quantitative approach is used depends on the

source of risk, possible outcomes, effects of a risk event, and the project team and

organisation’s attitude toward risk assessment.

Types of Risk Analysis

Risk analysis may be undertaken to various levels of precision depending on the risk

information and data available. Analysis may be qualitative or quantitative or a combination

of these, depending on circumstances. The order of complexity and cost of these analyses

increases from qualitative to quantitative. Partly for this reason, qualitative analysis is usually

used first in practice to obtain a general indication of the level of risk. Later more specific and

detailed quantitative analysis may be used.



Qualitative Risk Analysis

Qualitative methods use descriptive terms to identify and record consequences and

likelihoods of events and resultant risk. Qualitative risk assessments are readily used and

rely on experience and judgement. In a qualitative ranking, the likelihood of an event is

assigned a qualitative measure such as L = Low, M = medium, H = High, and E = Extreme.

For consequences qualitative methods use words or descriptive scales to describe the

consequences of each event. This method does not require extensive time or resources. It is

often used when resources are limited or extensive quantitative data are not available or not

required. For this reason, it is the easiest, quickest and most common form of risk

assessment and is used:

▪ as a preliminary study to determine further action;

▪ when quick results are required;

▪ for coarse ranking or filtering results;

▪ to justify further action;

▪ when there is no numerical data, such as new processes and new environments; and

▪ on low risk areas that do not justify further detailed risk assessment.

Outputs from qualitative risk analyses are usually evaluated using a risk matrix format (see

34 below). The risk matrix incorporates the pre-determined risk acceptance threshold and is

used to determine which risks require treatment and the priorities that should be applied.

Using the matrix, a risk rating for a given risk event can be selected by reading across and

down the matrix using the assigned likelihood and consequence descriptors.

However, qualitative approaches have some shortcomings compared with more quantitative

approaches. Key criticisms are that qualitative methods are imprecise, it is difficult to

compare events on a common basis, there is rarely clear justification of weightings placed

on severity of consequences and the use of emotive labels makes it difficult for risk

communicators to openly present risk findings to stakeholders.

How likely is the risk to occur?

Determining the likelihood or probability of an event occurring and giving rise to an

unacceptable risk is an important step in risk analysis. The public sector has generally

adopted a qualitative approach to this step and organisations have developed standard tools

to help users adopt a consistent approach.



Measures of Likelihood of Occurrence Descriptor Description

Almost certain The event is expected to occur in most circumstances

Likely The event will probably occur in most circumstances

Possible The event might occur at some time

Unlikely The event is not expected to occur, but could occur

Rare The event may occur only in exceptional circumstances

FIGURE 2 – MEASURES OF LIKELIHOOD OF OCCURRENCE

For each risk, the likelihood will need to be considered and recorded in the Risk Register.

Likelihood is a key factor in decisions on risk but must always be considered together with

the impact, or consequence, of risk on the activity in order to reach an assessment of the

level of risk associated with a particular activity.

What are the Likely Consequences?

The consequence, or impact, of risk can be defined and quantified in terms of:

▪ financial impact, such as:

- increased costs;

- value of insurance payouts; or

▪ non-financial impact, such as:

- disruption to service delivery;

- lack of service continuity;

- poor user acceptance;

- negative publicity;

- political fallout;

- accountability concerns;

- flow-on effects to other agency programs; and

- electoral consequences for government.

Understanding the potential consequences and the possible financial and non-financial

outcomes is essential to managing those risks. The following table below provides some

guidance in determining and describing the severity of consequences.



Measures of Qualitative Consequences Descriptor Description

Severe Death, huge financial loss, failure to achieve corporate or project objectives, extreme damage to the agency’s reputation, extreme political and/or community sensitivity, public outrage, likely to attract intense media and/or Ministerial/Agency Head interest

Major Extensive injuries, loss of capacity to perform organisational functions, major financial loss, significant impact on strategic/operational objectives, serious damage to the agency’s reputation, significant political and/or community sensitivity, likely to attract persistent media and/or Ministerial/Agency Head interest

Moderate Medical treatment required, would not threaten the program or project, but would mean that the program could be subject to significant review of or changed ways of operating, high financial loss, moderate impact on strategic and/or operational objectives, damage to the agency’s reputation, a moderate political and/or community sensitivity, likely to attract some media interest and/or interest from the Ministerial Office or from senior executives

Minor First aid required, threatens the efficiency or effectiveness of some aspect of the program or project but would be dealt with internally, low financial loss, minimal impact on agency strategic/operational objectives, low political and/or community sensitivity, likely to attract interest of relevant managers

Insignificant No injuries, low financial loss, consequences are dealt with by routine procedures

FIGURE 3 – MEASURES OF CONSEQUENCES

What is the Level of Risk?

The approach most readily used in making decisions about the level of risk in the workplace

tends to be qualitative. The level of risk is determined from the relationship between

likelihood and consequence, which is normally set out in a table such as the table below.

In this model, the level of risk to be determined should include the degree of controls already

in place and how effective they are. It uses descriptive words or scales to rank the potential

likelihood and consequences of the event occurring, as shown in the example table:



FIGURE 4 – EXAMPLE OF A QUALITATIVE RISK ANALYSIS

In the example matrix, there are 25 potential risk combinations and the risk outcomes have

been divided into four risk levels (ratings). This type of matrix is typically used to compare

risk levels for different events and to set priorities for risk treatment actions.

Ranking the risk helps guide actions in relation to managing the risk, for example:

▪ High Risk – requires detailed research and management planning at senior levels;

▪ Medium Risk – requires specified management responsibility, usually by senior

management;

▪ Low Risk – management is likely by following routine or set procedures; and

▪ Insignificant Risk – generally will not need managing.

Qualitative Analysis is useful to identify insignificant risks, therefore saving resources, such

as time and effort, is necessary or to highlight important risks that may require further

analysis.

In some cases, it may be useful to re-analyse the risks and taking into account the intended

treatments to determine whether they are sufficient. Any remaining or residual risks that

may still represent any concerns to the organisation and require additional treatment, should

be addressed quickly and appropriately.

Semi-Quantitative Risk Analysis

Semi-quantitative approaches to risk assessment are currently widely used to overcome

some of the shortcomings associated with qualitative approaches. Semi-quantitative risk

assessments provide a more detailed, prioritised ranking of risks than the outcome of

qualitative risk assessments. Semi-quantitative risk assessment takes the qualitative

approach a step further by attributing values or multipliers to the likelihood and consequence

groupings. Semi-quantitative risk assessment methods may involve multiplication of



frequency levels with a numerical ranking of consequence. Several combinations of scale

are possible.

Figure 5 shows an example of a semi-quantitative risk matrix where the likelihoods and

consequences (impacts) have been assigned numbered levels that have been multiplied to

generate a numeric description of risk ratings. The values that have been assigned to the

likelihoods and consequences are not related to their actual magnitudes, but the numeric

values that are derived for risk can be grouped to generate the indicated risk ratings. High

risk events have risk ratings greater than 8, Medium risks are between 5 and 8, and so on.

FIGURE 5 – EXAMPLE OF A BASIC SEMI-QUANTITATIVE RISK RATING MATRIX

Semi-qualitative risk assessment methods are quick and relatively easy to use, clearly

identify consequences and likelihoods, usually provide a general understanding of

comparative risk between risk events, and are useful for comprehensive risk assessments.

However, semi-quantitative approaches share some shortcomings with qualitative

approaches; that is in circumstances when it is difficult to compare events on an even basis,

it is difficult to justify weightings placed on severity of consequences and the use of emotive

labels.

Quantitative Risk Analysis

Quantitative risk analysis is completed on prioritised risks from qualitative analysis.

Quantitative risk analysis then analyses the effect of those risks. Quantitative risk analysis is

performed to access the probability of achieving specific project objectives, to quantify the

affect on the overall project objective, and to prioritise the risk based on significance to

overall project risk. Quantitative risk assessment uses processes somewhat similar to the

qualitative approach except that all numerical values are used as descriptors. Likelihood is

usually expressed as a probability, a frequency or a combination of exposure and probability.

They identify consequences in terms of relative scale (orders of magnitude) or in terms of

specific values (such as estimates of cost).



Numerical values are assigned to consequences using data from sources such as historical

records; industry experience; published literature; experiments and research; and economic,

engineering or statistical models. Usually specially developed software packages are used

to assist in the process. Quantitative analyses of risks permit a detailed assessment of their

influence on time, cost and quality of the project. Since some of the estimates made in

quantitative analysis are doubtful as to their precision, a sensitivity analysis (project variables

are given different values to identify different outcomes and the severity of each) should be

undertaken to test the effects of changes in assumptions and data on the end result.

The output of quantitative risk management provides information for handling a project’s

most threatening risks and promising opportunities.

CASE STUDY: Chrysler PT Cruiser

In 2000 the Chrysler Corporation introduced the PT Cruiser with anticipated

delivery to car dealers in early 2001. Thousands of eager customers headed to

their car dealers to buy one only to find they were not available. Perspective

customers were encouraged by both Chrysler and car dealers to pay a deposit to

guarantee delivery. The customers grew increasingly frustrated as very few PT

Cruisers became available due to manufacturing constraints and poor production

efforts. As a result, dealerships refunded many customer deposits. Further, some

of those customers lost faith in Chrysler and instead of awaiting the arrival of the

PT Cruiser, opted to purchase an alternate vehicle from other manufacturers.

Project Goal - The goal to deliver PT Cruisers to dealerships everywhere in

2001 was not met, causing Chrysler not only to lose PT Cruiser buyers but

potential buyers altogether.

Using Risk Management - If Chrysler had performed a good risk analysis

regarding the delivery of the PT Cruisers as promised, the production and

manufacturing availability problems would have been considered and mitigation

strategies (such as alternative marketing strategies) put in place prior to the

delivery promises



Risk Evaluation

Risk evaluation is about making decisions, based on the outcomes of risk

analysis, about which risks need treatment and the priority for treatment

implementation.

Evaluating the risks involves comparing estimated levels of risk against the criteria for

acceptable/ unacceptable risk determined in the earlier step – establishing the context.

Based on this comparison, the need for treatment can be considered.

This enables the risks to be ranked according to project management priorities. In some

circumstances if the assessed level of risk is high, then the risk will usually require further

treatment in order to be acceptable. If the assessed level of risk is low, then a decision may

be made to not treat the risk in any way other than maintaining existing controls. This

decision will be influenced by the organisation’s risk attitude and the risk criteria that have

been established. This step should consider the balance between risk and potential benefits

and costs.

CASE STUDY: The Millennium Train Project

The Millennium Train project was initiated on 8 October 1998 when the New

South Wales State Rail Authority signed a contract for the design, construction

and in-service management of 81 new suburban double-deck electric passenger

trains. These became known as the Millennium Train.

While the New South Wales Auditor-General found that the train represented

value for money, the project came in well beyond schedule and considerably

over budget.

The Millennium Train project highlights issues concerned with technically

complex and innovative public projects. Risk management is an essential

element of such projects, particularly where the number of suitable suppliers or

contractors is limited. This inevitably places the government in a relatively

weaker bargaining position and the supplier in an almost monopolistic position

(New South Wales Auditor-General 2003).

The risks of not achieving contract delivery requirements in the Millennium Train

project were significant but the New South Wales State Rail Authority and the

Minister for Transport were not provided with a risk management plan for the

Millennium Train. With an aggressive delivery schedule the risk was borne

disproportionately by the government. The New South Wales Auditor-General

(2003: 5) said:

.... because governments cannot readily walk away from such projects, even if

difficulties arise, they necessarily carry significant risk for such projects. Contract

provisions designed to share risk with the private sector providers thus need to

be robust and enforceable should the need arise.

Risk Treatment

Risk treatment involves selecting one or more options for modifying risks and

implementing those options.



Once a risk has been identified and assessed, a decision must be made concerning which

response is appropriate for the specific risk. This is ultimately about enhancing opportunities

and reducing threats to project objectives.

Risk treatment involves a cyclical process of:

▪ assessing a risk treatment;

▪ deciding whether residual risk levels are tolerable;

▪ if not tolerable, generate a new risk treatment; and

▪ assessing the effectiveness of that treatment.

Risk treatments must be appropriate to the significance of the risk, cost effective in meeting

the challenge, realistic within the project context, agreed upon by all parties involved, and

owned by a responsible person. They must also be timely. Selecting the best risk response

from several options is often required. Alternatively, a number of treatment options can be

considered and applied either individually or in combination.

Undertake cost-benefit analysis. Many treatment plans are not cost-effective and

will never get done. There must always be an opportunity to reject recommended

treatments and look for alternative treatments.

When selecting risk treatment options, the project manager should consider the values and

perceptions of stakeholders and the most appropriate ways to communicate with them.

Where risk treatment options can impact on risk elsewhere in the organisation, or on other

projects, or with stakeholders, they should be involved in the decision.

Risk Treatment Options

Several risk treatment options are available. The option or mix of options most likely to be

effective should be selected for each risk. Specific actions are developed to implement that

option. A fallback plan can be developed for implementation if the selected option is not fully

effective or if an accepted risk occurs. For the project it may be prudent to consider a

contingency reserve for time and/or cost. If developed, it may include identification of the

conditions that will trigger access to the contingency reserve.

Mitigate Risk

Reducing risk is usually the first alternative considered. There are basically two strategies for

mitigating risk: (1) reduce the likelihood that an event will occur and/or (2) reduce the

consequence that the adverse event will have on the project. The cost and time to reduce or

eliminate the risks is more cost effective than repairing the damage caused by the risk. The

risk may still happen, but hopefully the cost and impact of the risk will both be very low.

Examples of mitigation are:

▪ complete more tests on the project work before implementation;

▪ develop prototypes, simulations, and limited releases; and



▪ include a back-up diesel generator for a hospital to further reduce the likelihood of a

power outage.

Avoiding Risk

Risk avoidance is changing the project plan to eliminate the risk entirely. The project

manager may also isolate the project objectives from the risk’s impact or change the

objective that is in jeopardy. For example, adopting proven technology instead of

experimental technology can eliminate technical failure. Another example is to shift planned

outdoor work during the cyclone season to another time of the year. The most radical

avoidance strategy is to shut down the project entirely.

Transferring Risk

Risk transfer requires shifting some or all of the negative impact of a threat, along with

ownership of the resource, to another party. Transferring the risk simply gives another party

responsibility for its management - it does not eliminate the risk. The use of insurance,

where it is applicable may be an appropriate method of risk transfer. Another method is to

transfer the risk through some contractual obligation. It must be remembered however, that

no-one will willingly accept a risk without some form of compensation for doing so. Whilst it is

obvious that insurance carries a cost, the transference of risk through a contractual option

will also inevitably increase the cost of a contract. Common examples of risk transfer

include:

▪ Insurance;

▪ Warranties;

▪ Guarantees; and

▪ Fixed-price contracts.

Sharing Risk

Risk sharing allocates proportions of risk to different parties. Sharing risk has drawn more

attention in recent years as a motivation for reducing risk and, in some cases, cutting project

costs. An example is the Southern Cross Station project, which experienced significant cost

over - runs. However, the private sector met most of these costs whilst the government met

costs related to additional work requested and contamination clean-up, which was a shared

risk in the contract.

Retaining Risk

If the other methods fail to adequately or fully treat the risk, the project will be faced with

accepting the entire risk or any residual risk remaining after some initial treatment. Some

risks are so large it is not feasible to consider transferring or reducing the event (such as an

earthquake or flood). The project manager assumes the risk because the chance of such an

event occurring is very low. In other cases, should the risk occur, the project will be exposed

to some degree of impact which it must manage internally. To ensure the initial project

estimates are not exceeded, it must include sufficient contingency (time and dollars) to cover

the eventuality.



Monitor and Control Risks

Monitor and control risks is the process of implementing risk treatments, tracking identified

risks, monitoring residual risks, identifying new risks, and evaluating risk process

effectiveness throughout the project. Project managers should monitor risks just like they

track project progress. Risk needs to be constantly reviewed and updated, it should be a

regular component of project meetings and updates should be provided through project

reporting. The project team need to be continuously monitoring the project for new, changing

and outdated risks.

The other purpose of monitor and control risk is to determine if:

▪ project assumptions are still valid;

▪ an assessed risk has changed or can be retired;

▪ risk management policies and procedures are being followed; and

▪ contingency reserves of cost and/or schedule should be modified in alignment with

the current risk assessment.

This stage can also involve choosing alternate strategies, executing a contingency or

fallback plan, taking corrective action, and modifying the project management plan. Each

identified risk should be assigned to an individual; normally it is the person having line

responsibility for the work package or segment of the project. This person reports

periodically to the project manager on the effectiveness of the plan, any unanticipated

events, and any correction needed to handle the risk appropriately.

It is important that throughout this stage the project captures any lessons learned and

updates the risk management templates for the benefit of future projects and to improve the

organisation’s risk management processes.

Closing Risks

Upon assessing that a risk is no longer active or needs no further active management, the

following steps should be taken:

▪ The individual risk record is marked as closed; and

▪ Where appropriate, detailed information is captured in lessons learned.

Communication and Consultation

Communication and consultation is a dialogue between the project team and its

stakeholders. This dialogue is both continual and iterative. It is a two–way process that

involves both sharing and receiving information about the management of risk. However, this

is not joint decision making. Once communication and consultation is finished, decisions are

made and directions are established by the project manager, not by stakeholders.

Discussions could be about the existence of risks, their nature, form, likelihood, and

significance, as well as whether or not risks are acceptable or should be treated, and what

treatment options should be considered.



Contingency Planning

A contingency plan is an alternative plan that will be used if a possible foreseen risk event

becomes a reality. The contingency plan represents preventative actions that will reduce or

mitigate the negative impact of the risk event. The absence of a contingency plan, when a

risk occurs, can cause a project manager to delay or postpone the decision to implement a

remedy. This postponement can lead to panic, crisis management, and acceptance of the

first remedy suggested. Such after-the-event decision making under pressure can be

potentially dangerous and costly. Contingency planning evaluates alternative remedies for

possible foreseen events before the risk occurs and selects the best plan among the

alternatives. This early contingency planning facilitates a smooth transition to the remedy or

work-around plan. The availability of a contingency plan can significantly increase the

chance for project success.

Conditions for activating the implementation of the contingency plan should be decided and

clearly documented. The plan should include a cost estimate and identify the source of

funding. All parties affected should agree to the contingency plan and have authority to make

commitments. Because implementation of a contingency plan can cause disruption in the

sequence of work, all contingency plans should be communicated to the project team to

minimise surprise and reduce resistance.

Establishing Contingency Reserves

Contingency funds are established to cover errors in estimates, omissions, and uncertainties

that may appear as the project is implemented. When, where, and how much money will be

spent is not known until the risk event occurs. The size and amount of contingency reserve

will depend on the type of project (is it something the organisation has performed before),

inaccurate time and cost estimates, technical problems, potential scope changes and

problems not anticipated. Contingencies can vary from a few percent up to 60 percent for

construction, unique or high technology projects. Simply picking a percentage of the baseline

and calling it contingency is not a sound approach. Also adding up all the contingency

allotments and combining them is not conducive to sound control of the reserve fund.

Budget Reserves

These reserves are identified for specific work packages or segments of a project found in

the baseline budget or work breakdown structure. Budget reserves are for identified risks

that have a low chance of occurring. The reserve amount is determined by costing out the

accepted contingency or recovery plan. If the risk does not occur the funds are returned to

the management reserve. Therefore, the budget reserve decreases as the project

progresses.

Management Reserves

These reserves are needed to cover major unforeseen and potential risks and are applied to

the total project. For example, a major scope change may appear necessary midway in the

project. Because this change was not anticipated or identified, it is covered from the

management reserve. Management reserves are established after budget reserves are



identified and funds established. These funds are independent of budget reserves and

controlled by someone external to the project (normally a budget manager or a project

office). Most management reserves are set using historical data and judgements concerning

the uniqueness of the project.

Benefits of Risk Management

There are numerous benefits to be gained in implementing risk management procedures,

including:

▪ more effective strategic planning;

▪ improved cost control;

▪ minimised disruptions/delays;

▪ improved utilisation of resources;

▪ improved knowledge and understanding of risk exposure;

▪ improved understanding of the project;

▪ feedback – ensures the project achieves objectives;

▪ proactive identification of threats; and

▪ improved confidence in time/cost forecasts.

Undertaking risk management does not make a project immune from risk. The principal aim

is to manage risks as effectively as possible by reducing them to “acceptable” levels.

Project Issue Management

Issues are unplanned or unexpected problems that arise during the course of a project.

Issues are always associated with some degree of impact to the project and therefore need

to be assessed and resolved in a timely fashion. An issue differs from a risk in that it is an

actual fact, while a risk is an event that may or may not occur in the future.

The primary objectives of issues management are to:

▪ manage each issue from identification as a concern through to closure;

▪ allow each issue to be resolved and monitored based upon direction from the project

manager and/or project sponsor; and

▪ communicate the impact of issues to the relevant stakeholders.

When resolution of an issue requires a change to scope, schedule, quality or cost of the

project, the identified change management process must be followed to control and

implement the resolution.

To further define the issue management process, each issue will be tracked through:

▪ Initiation – identify and document the issue;

▪ Validation – verify the issue is valid and requires management;



▪ Analysis – assess priority and severity and assign responsibility to investigate

alternatives;

▪ Planning – investigate and recommend a course of action;

▪ Control – decide on a course of action; and

▪ Implementation – execute and monitor implementation of the approved course of

action.

Like risks, all issues must have an owner who is accountable for prompt resolution.

CASE STUDY: Systemic Failure in Rail Safety

The Waterfall Accident

The Waterfall railway accident occurred on 31 January 2003 and was one of the

most tragic accidents in Australian railway history resulting in the loss of seven

lives. The subsequent investigation found that there was a high probability that

the driver became incapacitated at the controls as a result of a pre-existing

medical condition, shortly after departing Waterfall Station. The train then

continued to accelerate, out of control, with maximum power applied.

The deadman system and the guard were the designated risk controls against

driver incapacitation. Both controls failed to intervene as intended and the train

overturned on a curve while travelling at approximately 117km/h. The systemic

causes of the accident were the simultaneous failures of risk controls in the

areas of medical standards, deadman system and training.

Although the train was fitted with two data loggers, they had not been

commissioned. State Rail had insufficient safety and risk management expertise

and had not systematically identified hazards to its operations or effectively

controlled all the risks that had been identified. It relied on accident trends to

identify risks, rather than evaluating what events might possibly occur – so that

rare but catastrophic events were not adequately identified under this reactive

approach to risk management.

The Rail Safety Regulator had been inadequately resourced to develop an

effective rail safety regime, and consequently had not identified and/or acted on

the risk management deficiencies that existed at State Rail.

A total of 66 recommendations were made as a result of the safety

investigations.



Issues Log Template

Issues Log Example

ISSUES LOG Date Summary of

issues Impact/Cost Suggestkions and/or

Recommendations Priority Action to be taken Date Resoled

ISSUES LOG (example) Date Summary of

issues Impact/Cost Suggestkions and/or

Recommendations Priority Action to be taken Date Resoled

14/3/2013 Resignation of agency’s contract manager

Loss of contract and corporate knowledge, recruitment costs for new CM

Source other employee to fill role (noting lack of in-house contract management expertise)

Hire external contractor

Commence recruitment action

Devolve contract management to junior team members

Immediate Hire temporary contractor to fill CM role

Recruit new permanent employee with appropriate expertise

Not yet resolved



Risk Tool

If the Description statement is true, the risk does not need to be considered further.

Management Factors Risk Factor Description

Organisational Stability The management structure through the project will remain stable.

Management support The management chain strongly supports the project, at a practical level it assists in identifying and resolving issues.

Customer Factors Risk Factor Description

Customer Involvement End users are highly involved with project, provide significant input.

Customer Experience End users are highly experienced with similar capability have a clear idea of how needs can be met.

Customer Acceptance End users accept requirements and design. A process is in place for the customers to accept the capability.

Customer training End user training needs have been considered, training in progress or plans in place.

Customer communication Customer communication is good, roles and responsibilities on both sides are defined and understood.

Workflow and organisation If the project changes some aspect of the organisation or workflow in the user or operator community they are ready for the change

Outcomes Outcomes in terms of business benefit are defined and linked to requirements, with identified measures of success from a business perspective.

Cost Factors Risk Factor Description

Project Size It is a small-scale system, it is not complex and it is highly modular.

Hardware or software constraints

There are no hardware or software constraints.

Technology Mature technology will be used and there is in-house experience with the technology.

Reusable components Components are directly useable and are available

Cost estimates The team believes that cost estimates are realistic

Cost controls Cost controls are well established in the organisation and will be effectively implemented by the project manager.

Schedule Factors Risk Factor Description



Development schedule The team believes that the schedule is acceptable and can be met.

External factors There are no external factors or dependencies that could impact schedule.

Project Content Risk Factor Description

Requirements stability There is little change expected in the requirements baseline. External interfaces are stable.

Requirements complete and clear

All requirements are specified and clearly articulated.

System testability System requirements are easy to test, procedures are in place for testing

Design difficulty The design approach is well understood.

Implementation difficulty The design is within the capabilities of the team to implement.

System dependencies Internal interfaces, system interactions and the dependencies between system elements are clearly defined.

Test Factors Risk Factor Description

Testability The system has a modular design that allows for easy test planning and execution.

Expected test effort A good estimate is available for the test effort and it is easily aligned with the system acceptance approach.

External interfaces Little or no integration to interfaces is required.

Project Management Factors Risk Factor Description

Approach Comprehensive planning and control processes are in place.

Communication There has and will be clear communication of goals and status to stakeholders.

Project manager experience

The Project Manager is very experienced with similar projects.

Project manager authority / support

The project has the complete support of the team and management.

Development Process Factors Risk Factor Description

Alternative analysis A complete set of alternatives have been analysed and the assumptions are verifiable.

Change management Changes in scope are and will be reviewed and approved by all stakeholders.



Development documentation

Development documentation is available and correct.

Defined engineering process

The development process is established, effective, and will be followed by team.

Early identification of defects

Defects are caught early in the test process.

Change control process Formal change control process are in place, effective and followed.

Defect tracking Defect tracking system are established and are used consistently.

Development Environment Factors Risk Factor Description

Physical Facilities Physical facilities are in place.

Development environment Hardware, software and tools are in place

Configuration management The configuration management system is established, staff trained and the system is used consistently.

Vendor support Hardware and software vendor support is available.

Staff Factors Risk Factor Description

Staff Availability Staff are in place, with little turn over and few distractions.

Mix of staff skills Staff skills provide the right coverage for the project.

Product knowledge Staff are experienced at developing this type of product.

Training of team A training plan is in place and ongoing training is planned, if required.

Team morale The team is strongly committed to the success of the project.

Team productivity All milestones have been met, deliverables have been provided on time and productivity is high.

Contract Management Risk Factor Description

Contract manager experience

An experienced contract manager is available.

Scope of work The SOW is complete and unambiguous with a common understanding reached between the parties.

Contract administration Contract administration procedures are in place through a contract management plan and adhered to by staff on both sides.

Payment Criterion The payment criterion for milestone payments are well defined and performance measures for performance related payments are understood and agreed between parties.

Contractor’s experience The Contractor is experienced in similar projects.



Complexity of Project The capability to be delivered by the contract is not considered as complex.

Novelty The capability to be delivered under the contract is well within industry norms.

Contractor’s structure The capability is to be delivered by a horizontally and vertically integrated company rather than a joint venture or through a number of subcontractors.

Contractor’s capacity The contractor clearly has the financial and human resources to deliver the capability.

Communication Communication flow between the parties is clearly defined, adhered to and effective.

Contractor’s attitude The contractor is keen to achieve the contracted outcomes and works with the contract manager to resolve any issues.



Organisational Strategy and Structures



Strategy is implemented through projects. Every project should have a clear link

to the organisation’s strategy. Project selection is the process of evaluating

individual projects or groups of projects and then choosing to implement some

set of them so that the objectives of the organisation will be achieved.

In some organisations, selection and management of projects often fail to support the

strategic plan of the organisation. Often strategic plans are written by one group of

managers, projects selected by another group, and projects implemented by another. These

independent decisions by different groups of managers create a set of conditions leading to

confusion, and frequently an unsatisfied customer.

Mission, objectives, and strategies are set to meet the needs of the customer. Development

of a mission, objectives, and organisational strategies depend on external and internal

environmental factors. External environmental factors are usually classified as political,

social, economic, and technological; they signal opportunities or threats in setting the

direction for the organisation. Internal environmental factors are frequently classified as

strengths and weaknesses such as management, facilities, core competencies, and final

condition. The outcome of the analysis of all these environmental factors is a set of

strategies designed to best meet the needs of customers.

Aligning Strategy with Projects

Every project should contribute value to the organisation’s strategic plan, which is designed

to meet the future needs of its customers. Ensuring a strong linkage between the strategic

plan and projects is a difficult task that demands constant attention from top and middle

management. The larger and more diverse an organisation, the more difficult it is to create

and maintain this strong link. An organisation that has a coherent link of projects to strategy

has greater cooperation across the organisation, performs better on projects and has fewer

projects.

Organisations must have a well understood strategic plan and a process for prioritising

projects by their contribution to the plan (see Challenge at SAS case study below). Since

feasible projects can compete for the same resources available in an organisation, a

selection needs to be made in order to define the priority of execution. The priority list is to

be made according to each project’s strategic impact, business perspectives and resources

available within the organisation. Other elements such as skills available in the organisation,

risk and opportunity, and difficulty are evaluated and weighted in order to rank the project

priority list. The ultimate outcome is best use of scarce organisational resources, and

improved communication across projects and sections.

Project Managers and Organisational Strategy

There are two main reasons why project managers need to understand the organisation’s

mission and strategy. The first reason is so they can make appropriate decisions and

adjustments.



Author, J. P. Descamps1 has observed that project managers who do not understand the

role their project plays in accomplishing the strategy of their organisation tend to make the

following serious mistakes:

▪ focusing on problems or solutions that have low priority strategically;

▪ overemphasising technology as an end in and of itself, resulting in projects that

wander off pursuing exotic technology that does not fit the strategy or customer need;

▪ trying to solve every customer issue with a product or service rather than focusing on

the 20 percent with 80 percent of the value (Pareto’s Law); and

▪ engaging in a never-ending search for perfection that no one except the project team

really cares about.

The other reason project managers need to understand the organisation’s strategy is so they

can be effective project advocates. Project Managers have to be able to demonstrate to

senior management how their project contributes to the organisation’s mission. Protection

and continued support come from being aligned with corporate objectives. Project managers

also need to be able to explain to team members and other stakeholders why certain project

objectives and priorities are critical. This is essential for getting agreement on contentious

decisions.

Challenges at SAS

In the early 1980s Jan Carlzon took over the helm of Scandinavian Airlines

(SAS). The company was facing large financial difficulties and losing $17 million

per annum and had an international reputation for always being late. A 1981

survey showed that SAS was ranked no. 14 of 17 airlines in Europe when it

came to punctuality. Furthermore, the company had a reputation for being a very

centralised organisation, where decisions were hard to come by to the detriment

of the customers, the shareholders and the staff. Carlzon focused on developing

a strategic mission that would make SAS profitable during a time of zero market

growth. He revolutionised the airline industry through an unrelenting focus on

customer service quality.

Under Carlzon’s leadership, SAS scrutinised every project and expense as to

whether it contributed to improving the service to the frequent business traveller.

If the answer was no, no matter what it was or how dear it was to those within

SAS, it was cut. Projects such as developing vacation packages to the

Mediterranean were eliminated.

One of the first things Jan Carlzon did at SAS was to introduce the world's first

separate cabin for Business Class while at the same time doing away with First

Class on its European routes. Within one year of taking over, SAS had become

the most punctual airline in Europe and had started an on-going training program

for more than 12,000 staff members. These changes soon impacted the bottom-

line as well and the company made a profit of $54 million in 1982.

1 Descamps, J.P., “Mastering the Dance of Change: Innovation as a Way of Life.” Prism, Second Quarter, 1999, pp. 61- 67



The turnaround by SAS clearly illustrates the importance of a clear

organisational plan being linked to projects that contribute to the overall success

of the firm.

Project Organisational Structures

A good project management system appropriately balances the needs of both

the organisation and the project by defining the interface between the project and

the organisation in terms of authority, allocation of resources, and eventual

integration of project outcomes into mainstream operations

Many organisations have and continue to struggle with creating a system for organising

projects while managing ongoing operations. One of the main reasons is that most projects

are multidisciplinary in nature and require the coordinated efforts of a variety of specialists to

be completed. Traditionally most organisations are structured according to functional

expertise with specialists from procurement, finance, human resources, ICT residing within

unique teams. Many researchers have noted that these groups develop unique customs,

values and working styles that inhibit “integration” across functional boundaries.

Irrespective of whether the organisation is conducting a few occasional projects or is fully

project-oriented and carrying on multiple projects, any time a project is initiated, three

organisational issues immediately arise. First, a decision must be made about how to tie the

project to the organisation. Second, a decision must be made about how to organise the

project itself. Third, a decision must be made about how to organise activities that are

common to other projects.

Organisation theory recognises three basic organisational types; they are functional, matrix

and pure project.

Functional Organisation

The functional organisation is generally structured to facilitate ongoing operations. It has well

defined departments and well-defined roles for people. The lines of authority and formal

communication are clearly defined

For functionally organised projects, the project is assigned to the functional unit that has the

most interest in ensuring its success or can be most helpful in implementing it. Under these

circumstances, a high-ranking manager in that area is given the responsibility for

coordinating the project. Each division and branch have a structured chain of authority that

indicates, at least on paper, who is in charge of each group and who has the authority to

make decisions (see Figure 6). Authority runs vertically, and there are definite gateways

between different divisions. This model can be compared to a group of silos within a silo.



FIGURE 6 - FUNCTIONAL ORGANISATION

There are advantages and disadvantages with using the existing functional organisation to

administer and complete projects. The major advantages are:

▪ There is maximum flexibility in the use of staff;

▪ Individual experts can be utilised by many different projects;

▪ Specialists in the division can be grouped to share knowledge and experience;

▪ The functional division also serves as a base of technological continuity when

individuals choose to leave the project, and even the organisation; and

▪ The functional division contains the normal path of advancement for individuals

whose expertise is in the functional area.

The disadvantages of housing a project in a functional area are:

▪ The customer is not the focus of activity and concern;

▪ There are often several layers of management between the project and the

customer;

▪ The motivation of people assigned to the project tends to be weak. The project is not

in the mainstream of activity and interest;

▪ Cross-divisional communication and sharing of knowledge is slow and difficult at

best; and

▪ Sometimes, no one individual is given full responsibility for the project.

Pure Project Organisation

The pure project organisation is the complete opposite of the functional organisation. The

project is separated from the rest of the existing organisational structure, with dedicated full-

time resources assigned to the project (see Figure 7). In place of the vertical structure of a

functional organisation is a more flexible structure that changes as projects are begun,

executed and closed. The team’s manager is also the project manager. Teams are made up

of people who have expertise in the different areas as required by the project. The project



manager has significant authority over both the team members and the project. This type of

structure removes the need to compete with other areas of the organisation for resources

(people, facilities and equipment) and to stay apart from day-to-day operations.

FIGURE 7 - PURE PROJECT ORGANISATION

As with the functional organisation, the pure project organisation has its unique advantages

and disadvantages. Some of the advantages are:

▪ The project manager has full line authority over the project;

▪ All members of the project work force are directly responsible to the project manager;

▪ The lines of communication are shortened;

▪ The project team has a strong and separate identity of its own and tends to develop a

high level of commitment from its members;

▪ As authority is centralised, the ability to make swift decisions is greatly enhanced;

and

▪ The organisational structure tends to support a holistic approach to the project.

While the advantages present a strong case for this type of structure the disadvantages are

equally significant, they are:

▪ Considerable duplication of effort in every area. Staff are not shared across projects;

▪ Staff tend to be hired by the project when they are available rather than when they

are needed. Similarly, they tend to be maintained on the project longer than needed.

Combining this with the disadvantages listed above makes this model very expensive

to operate and maintain;



▪ Individuals can become typecast and only work on certain projects; this can lead to

them falling behind in other areas of their technical expertise;

▪ Encourages inconsistency in the way in which policies and procedures are carried

out;

▪ A strong we-they culture can grow, distorting the relationships between project team

members and other staff; and

▪ Staff can become overly concerned about what will happen to them once the project

ends. If staff cannot see a viable alternative, they may draw the project out to protect

their jobs.

The Matrix Organisation

Matrix organisations combine the characteristics of both the functional and pure project

organisation to varying degrees (see Figure 8). The functional organisation provides expert

groups from which a project team can be drawn on a full time or part time basis.

A typical matrix organisation may have a project manager and a small full-time team with a

balance of the team made up by people with specific expertise drawn from functional groups

within the organisation. The matrix organisation requires strong support from senior

management and also careful overall management. It is unlikely to be successful if there are

unresolved conflicts between the project manager and managers of functional departments

whose staff are working on the project.

As it is a combination of functional and pure projects, the matrix organisation can take on a

variety of forms: strong, balanced and weak. Strong closely resembles the pure project with

the weak closely resembling the functional organisation. Finally, the balanced matrix lies in

between the other two.

FIGURE 8 - MATRIX ORGANISATION



The strong matrix has many employees involved in project work. Rather than being

assigned to the project team permanently, many employees are based in their functional

areas and are temporarily assigned to the project. An important aspect to note is that these

staff have few, if any, obligations imposed on them from their functional area during the

project. For the most part, they are focused on one or more projects at any given time. The

most important aspect of a strong matrix organisation is the function of project management.

It is normally a separate functional area to which all project managers belong and from which

they are assigned to projects.

The balanced matrix organisation is a balance between functional and pure. The

employees who staff projects come from different functions within the organisation, including

the project manager. Usually, project management is not a separate function but expertise

that is developed within a functional area.

The weak matrix organisation is closer to the functional organisation. Team members come

from different areas, and they often continue working in their areas along with the project.

One of the biggest challenges within this structure is helping the team members find the time

to undertake the project work. This model still has strong oversight from the managers who

are generally not very sympathetic to the needs of the various projects.

As with the other models, the matrix approach has its own unique advantages and

disadvantages. Its strong points are:

▪ The project is the point of emphasis;

▪ The project has reasonable access to the entire reservoir of technology in all

functional divisions;

▪ There is less anxiety about what happens when the project is completed;

▪ The matrix organisation responds flexibly and rapidly to the demands made by

clients;

▪ The project will have access to representatives from the administrative units helping

to ensure greater consistency with policies, practices and procedures within the

parent organisation; and

▪ Allows a better balance of resources across the organisation to achieve the targets of

several projects.

The disadvantages of the matrix organisation involve conflict and can have a serious impact

on the organisation. The disadvantages are:

▪ The balance between the needs of the project and the organisation are fairly delicate.

When doubt exists about who is in charge, the work of the project will suffer;

▪ The movement of resources from one project to another in order to satisfy different

schedules may foster political infighting among several project managers;

▪ Project workers have at least two bosses;

▪ Staff commitment can be variable; and

▪ Multi-layers of decision making.



Influence of Organisational Structure on Projects

In all projects it is essential for the project manager to have authority to carry out the

management process and the power to direct people to carry out specific actions. The

structure of the organisation should assist in this task as the organisational structure and the

project manager’s authority are closely linked. The project manager's authority is largely a

function of the project organisation.

Most if not all of these structures may exist at various levels within modern organisations.

For example, a specific project team may be set up within a fundamentally hierarchical

organisation. Table 5 identifies the level of influence a project manager is likely to have

within an organisation, based upon the type of project organisational structure adopted.

Organisation Structure

Functional

Matrix

Pure Project

Characteristics Weak

Matrix

Balanced

Matrix

Strong Matrix

Project Manager's Authority

Little or None Limited Low to

moderate Moderate to

High High to

Almost Total

Resource Availability Little or None Limited Low to

moderate Moderate to

High High to

Almost Total

Who controls the project budget

Functional Manager

Functional Manager

Mixed Project

Manager Project

Manager

Project Manager's Role

Part-time Part-time Full-time Full-time Full-time

Project Management Administrative Staff

Part-time Part-time Part-time Full-time Full-time

TABLE 1 - INFLUENCE OF ORGANISATIONAL STRUCTURE ON PROJECTS2

2 Table 5 Influence of Organisational Structure on Project, Sourced from PMBOK Guide, 5thed, p.222



Project Human Resource Management



Human resource planning is used to determine and identify human resources

with the necessary skills required for project success.

In the early stages of the project it is essential that the project manager clearly analyses the

tasks to be carried out and defines the qualifications and competence of the people they

need to carry out those tasks. This needs to be supported by clear project objectives. Project

managers also need to have a realistic view of availability of the people they require and

how they will recruit them. Project Human Resource Management is therefore a process of

organising the project team which is made up of people who have been assigned roles and

responsibilities to complete the project.

When project managers set their sights on deadlines, on deliverables, schedules and

budget, they must select and manage a team of experienced and competent professionals

who can meet the challenge. This requires that project managers understand the Project

Human Resource Management processes of planning, selecting, developing, and managing

a project team. Such an understanding enables project managers to lead the project team to

project completion and success.

Human Resource Planning process helps to develop a staffing management plan, determine

project roles, responsibilities and reporting requirements. The staffing plan details how and

when team members will be acquired, determines if a training need exists, and if it does

what training is required to fill the gap, recognition and reward programs and issues, and the

impact of the staffing management plan on the organisation. Project roles are designated for

persons or groups from inside and/or outside the organisation.

With the ‘wrong’ people doing the ‘right’ work, the project will invariably be

challenged and, worst, fail. The failure will not occur overnight – it may be

gradual or even invisible.

Leadership and Management

One of the keys to an effective project manager is building cooperative relationships

between different people. The success of the project is not entirely dependent on the

performance of the project team. Success or failure often depends on the contributions of

top management, line managers, customers, suppliers, contractors, and others.

Project managers are responsible for integrating assigned resources to complete the project

according to the plan. They also need to cope with changes in the plan and adjust schedules

as changed circumstances make the original plan unworkable. The role of a manager is to

keep the project going while making the necessary adjustments along the way. According to

the experts these two activities represent the distinction between management and

leadership. Management is about coping with complexity, while leadership is about coping

with change.



Good management brings about order and stability by formulating plans and objectives,

designing structures and procedures, monitoring results against plans, and taking corrective

action when necessary. Leadership involves recognising and articulating the need to

significantly alter the direction and operation of the project, aligning people to the new

direction, and motivating them to work together to overcome obstacles produced by the

change and work toward the new objectives.

Strong leadership, while usually desirable, is not always necessary to successfully complete

a project. Well-defined projects that encounter little or no problems often require little

leadership. Conversely, the higher the degree of uncertainty encountered on a project the

more leadership is required.

“Teamwork is a lot of people doing what I say”

-- Anonymous Boss

Managing Project Teams

One of the key ingredients to a successful project is the quality of the project team

implementing it. Therefore, a thorough understanding of all the project team’s responsibilities

and skills is crucial. The type and number of project team members can change throughout

the life of the project. Where possible all team members should be involved in the project

planning and decision-making process. Their early involvement and participation can add

additional expertise and strengthen their commitment to the project.

Human Resource Plan

To staff a project, the project manager needs to establish a forecast of personnel needed

over the life cycle of the project. First, a work breakdown structure (WBS) is prepared to

determine the exact nature of the tasks required to complete the project. (The WBS is

described in detail in Project Scope). The skill requirements for these tasks are assessed

and like skills aggregated to determine work force needs.

Project managers should also consider whether some of these tasks will need to be

subcontracted to industry. This may be the only option if internal personnel are unavailable

or cannot be located within the organisation.

The organisational structure will also have a significant bearing on the make-up of the

project team. For example, in a matrix organisation the project manager may only have one

or two full time staff members with the other skills being met by functional branches within

the organisation. In this instance the ability of the project manager to negotiate for those staff

members will be a key determinant for success.

Determining Staffing Levels

Clearly the size of the team is a crucial factor in success – too large and communication

within the project will be hindered but if too small a team then staff will be overwhelmed by

their tasks.



There is no single answer to determining the size of the team; it depends upon the

complexity of the project, the availability of people with the right skill sets and the type of

project organisation you choose.

The level of effort also differs for each stage as illustrated in Figure 9.

FIGURE 9 - LEVELS OF EFFORT OVER THE PROJECT LIFE CYCLE

In the majority of projects fewer personnel are required at the start and finish of a project

with the bulk required during the execution phase.

There are some guidelines as to the size of the project team:

▪ use analogies with other projects or functional areas to determine an approximate

breakdown of project functions and attribute positions to those functions;

▪ less than three people and your structure becomes a project risk factor which you

may have to manage or mitigate. Why a project risk?

- your team may lack critical skills at key points in the project;

- you will rely heavily on outside areas to provide critical skills; and

Initiate Plan Execute Control Close

* Appoint key team members* Conduct studies* Develop scope baseline: - Quality standards - Resources - Activities* Establish: - Budget - Cash flow - WBS - Policies & procedures* Assess risks* Present project brief* Approval next phase

* Gather data* Identify needs* Establish: - Goals - Objectives - Stakeholders - Risk levels - Strategy* Estimate resources* Identify alternatives* Approval for alternatives

Level of Effort

* Set up: - Organisation - Communications* Detail technical requirements* Establish: - Work packages - Information control systems* Procure goods & services* Execute work packages* Motivate team

* Direct, monitor, control, forecast - Scope - Quality - Time - Cost* Resolve problems

* Finalise products* Review & accept* Settle final accounts* Transfer product responsibility* Evaluate projectDocument results* Release/redirect resources* Reassign project team

Time



- if just one of your team leaves it is possible that the loss of experience will affect

your schedule (as you recruit and train a replacement) or your budget (as you

buy in outside skills).

▪ between six and eight people seems to work well and ten will be workable provided

they are divided into sub-teams; a team structure also provides redundancy in

functional areas; and

▪ more than 25 people becomes unworkable; break the team into interconnected

subprojects. You will also have to expend more effort on communication and

coordination within the project.

Acquire Project Team

‘Acquire Project Team’ is the process of confirming human resource availability

and obtaining the team necessary to complete project assignments.

Once the project structure has been agreed, it should be documented. The next step is to

then attain and assign human resources to the project. Staff can come from inside the

organisation or from outside in the form of contractors. Typically, a project team is

assembled from one or more of the following sources:

▪ specialist recruitment practices designed to source and screen external, suitable

applicants;

▪ resident and targeted members of the project organisation with the necessary array

of project skills;

▪ resident and available members of the project organisation with some of the

necessary project skills; and

▪ excess resources within the project organisation that could be deployed on the

project.

When selecting project team members, there are several base considerations which need to

be evaluated. The inputs to acquiring a project team are:

▪ Enterprise Environmental Factors – Project team members are available from

internal and external sources. When selecting project team members, it is important

to evaluate:

- Availability – Who is available and when are they available?

- Ability – What competencies do people possess?

- Experience – Have the people done similar or related work? Has the work been

of high quality?

- Interests – Are the individuals interested in working on this project?

- Costs – If you are using external contractors how much will they cost?

▪ Organisational Process – Reviewing the documented policies, procedures, and

guidelines governing staff assignments;



▪ Roles and Responsibilities – The roles and responsibilities defining the positions,

skills, levels of authority, and competencies that the project demands;

▪ Project Organisation Charts – A project organisation chart is reviewed to provide

an overview of how many individuals are needed for the project; and

▪ Staffing Management Plan – The Staffing Management Plan, along with the project

schedule, should be reviewed to ascertain when team members will be needed to

gain an understanding of the process to acquire and release staff.

The common tools and techniques utilised to help assure the acquisition of a good project

team are:

• Pre-assignment – Pre-assignment is commonly done when the project team positions

are known in advance. This is common when the project is dependent on the expertise

of an individual or if staff assignments are defined as a part of the project charter;

• Negotiation – Negotiation is used when the project manager needs to ensure that the

project receives competent staff within the required time frame, and that the project

team members have the bandwidth to work on their assignments through to

completion. Another situation which calls for negotiation is when specialised or scarce

resources are needed to complete the project plan (this applies to both internal and

external human resources);

• Acquisition – When performing organisations do not have the in-house staff needed

to complete the project, the staff acquisitions may be met by acquiring the resources

from outside sources (consultants or contractors);

• Virtual Teams – Virtual teams are utilised in the following situations:

- Teams comprise individuals who are not co-located in the same region;

- Teams comprise employees who work from home;

- Teams consist of individuals from different shifts or hours;

- Teams consist of individuals with mobility limitations or disabilities; and

- Projects which have no travel budget to co-locate.

In a virtual team, communications are very important. Also while planning, consider the time

added due to increased communications for setting expectations, how to resolve conflicts,

and how to include the right individuals in decision making processes.

The ultimate aim is to have the right people in the right roles. The outputs resulting from the

Acquire Project Team process are:

▪ Project Staff Assignments - Project staff assignments illustrate who has been

assigned to the project. These assignments should be documented in a team

directory, in notifications to team members, in project organisation charts, and in

schedules;

▪ Resource Availability - Resource availability details the time periods when each

project team member is or is not available to work on the project; and



▪ Staffing Management Plan Updates – Changes in the Staffing Management Plan

may be needed in order to rebase the planned with the real team.

A project manager’s success starts with creating the best team possible and

having the right people in the right roles

Develop the Project Team

‘Develop the Project Team’ is the process of improving the competencies, team

interaction, and the overall team environment to enhance project performance.

The project manager must strive to involve and develop the project team members as

individuals completing project work – and as team members completing the project

objectives together.

Teamwork is a critical factor for project success and developing effective project teams is

one of the primary responsibilities of the project manager. Strong management principles

apply throughout the project and this includes providing timely feedback and support as

needed, and by recognising and rewarding good performance. When conflict arises the

project manager should manage the conflict in a constructive manner and encourage

collaborative problem solving and decision making. The project manager must have strong

communication skills and communication to project team members must be clear, timely,

efficient and effective.

The objectives of developing a project team include, but are not limited to:

▪ improve knowledge and skills of team members in order to increase their ability to

complete project deliverables;

▪ improve levels of trust and agreement between team members in order to raise

morale, lower conflict, and increase team work; and

▪ create a dynamic and cohesive team culture to improve individual and team

productivity, team spirit, and cooperation, and to allow cross-training and mentoring

between team members to share knowledge and expertise.

The project manager will rely on several pieces of information to prepare for team

development:

▪ Staff assignments - The assignments of the project team members define the skills

of the project team members, their need for development, and their ability to

complete the project work as individuals, and as part of the collective team;

▪ Project Plan - The project plan defines the expectations of the project team, how the

team will operate, and how the team will be expected to communicate, function, and

perform;

▪ Staff management plan - The staffing management plan details how project team

members will be brought onto the project and transitioned out from the project;



▪ Performance reports - As the project team completes work, performance reports

will reflect on the quality, timeliness, and success of the project team; and

▪ External Feedback - When things are not well with the project team members,

stakeholders are often happy to tell the project manager. In these instances, the

project manager must query the stakeholders and organisational interfaces on the

performance of the project team members.

Training the Project Team

The project team members may not be selected specifically for the project. They may be

part of a current project or be volunteers. Where team members are not specifically selected

because of their skills and attributes, these should be assessed and any gaps in skills

identified and remedied. Training can include:

▪ Formal education;

▪ Classroom training;

▪ On-the-job-training; and

▪ Cross training.

Examining the Results of Team Development

Team development is an ongoing process. The primary goal of team development is to

improve project team performance. Improvements can include:

▪ Individuals - Improvements to individual skill sets may allow the individual to

complete their assigned work better, faster, or with more confidence;

▪ Team - Improvements to the project team may allow the team to perform with a focus

on technical requirements, project work, and working together to complete the project

work; and

▪ Individuals and team - Improvements to either team members or the project team

as a whole may lead to the better good of the project by finding better ways of

completing the project work.

Manage Project Team

‘Manage Project Team’ is the process of tracking team performance, providing

feedback, resolving issues, and managing changes to optimise project

performance.

It is crucial that all members of the project team understand what the team is expected to

accomplish, when, and at what cost. Also, senior management must be clear in delineating

the project goals, responsibilities and authority. Bringing people together, even when they

belong to the same organisation and contribute their efforts to the same objectives, does not

necessarily mean they will behave like a team. Organising the team’s work in such a way

that team members are mutually dependent on each other and recognise it, will produce a

strong impetus for the group to form a team. Project success will be associated with

teamwork.



The project manager will also need to address interpersonal conflict. When a project is first

organised, priorities, procedures and schedules all have equal potential as areas of conflict.

As the project progresses different factors will come into play such as technical

disagreements and personality conflicts. This state of flux will continue through to project

completion.

An inability of a project manager to handle conflict within the project team will lead to project

failure.

Stages Affecting Group Development

As an ongoing process, team building is crucial to project success. While team building is

essential during the start of the project, it is a never-ending process. The project manager

should continually monitor the project team and their performance to determine if any actions

are needed to prevent or correct various team problems.

One theory state that there are five stages of development that teams may go through. The

stages are not discrete but rather appear as levels in the group evolution from formation to

close. The stages are known commonly as Tuckman’s Model of Group Development with

'forming', 'storming', 'norming', 'performing' & 'adjourning' (see Figure 11). The duration of a

particular stage depends on team dynamics, team size, and team leadership. It is important

that the project manager understands team dynamics in order to move the team through all

the stages with minimum disruption to the project (see Figure 11).

FIGURE 10 -TUCKMAN’S MODEL OF GROUP DEVELOPMENT



FIGURE 11 -STAGE TEAM DEVELOPMENT MODEL

Stage 1 – Forming

This is an initial stage. The team-members are brought from various places and various

fields. They begin to establish ground rules by trying to find out what behaviours are

acceptable with respect to the project and interpersonal relations. This stage is completed

once members begin to think of themselves as part of a group.

Stage 2 – Storming

Since the members have come from different backgrounds, they have their own ideas on

how to complete the project work ahead of them. They would resist accepting solutions

offered by others. There is disunity, increased tension and may be jealousy. While they

accept being part of the group, they will resist constraints imposed on them by the group

leader. As these conflicts are resolved, the project manager’s leadership becomes accepted,

and the group moves to the next stage.

Stage 3 – Norming

This phase comes when members realise that they cannot impose their views on others and

are ready to cooperate with each other. They reconcile their differences, accept ground rules

and confide in each other. As they resolve their differences, they put all energy on the

project. Communication is improved and the team members begin to trust each other.

Stage 4 – Performing

At this stage, the work flows smoothly. Strengths and weaknesses of others are understood

and all work in unity, complementing each other’s short-comings as far as possible. The

group develops clearly defined rules, standards and behaviours. The team is united and has



a strong sense of purpose. Progress is experienced as more of the group’s energy is

channelled into the task and roles are viewed in terms of function instead of personality.

Stage 5 – Adjourning

On completion of the project, the team is disbanded. The project is wrapped up and handed

over to the stakeholders/sponsors. The project manager’s tasks include recognising the

contributions made by individuals and helping them make a successful transition to new

teams. Responses of members vary at this stage; for some there is a sense of achievement

while for others there is a sense of gloom on parting from friends gained during the project’s

life.



Project Governance



Project governance is the alignment of project objectives with the strategy of the

larger organisation by the project sponsor and project team. A projects

governance is defined by and is required to fit within the larger context of the

program or organisation sponsoring it but is separate from the organisational

governance.

Project governance is an oversight function that is aligned with the organisations governance

model and encompasses the project life cycle. Every project, no matter what size, will

require governance, as governance provides the project manager and the team with

structure, processes, decision-making models and tools for managing the project, while

supporting and controlling the delivery of outcomes. The structure of the governance on your

project must be decided before the start of the project, to ensure that it is included in the

planning as governance takes time and costs money.

It is the framework, which ensures that the project has been correctly conceived and is being

executed in accordance with best project management practice and within the wider

framework of the organisation’s governance processes. Effective project governance is

about ensuring that projects deliver the value expected of them. An appropriate governance

framework helps save money by ensuring that all expenditure is appropriate for the risks

being tackled.

Project governance is not about micro-management, rather it is about setting the terms of

reference and operating framework, defining the boundaries and ensuring that planning and

execution are carried out in a way which ensures that the project delivers benefits. Project

governance decisions should reflect the strategic reasons for the original decisions to

approve, fund and resource projects. Project governance bodies and structures must

recognise and manage risk in a way that is most likely to achieve the project’s desired

outcomes, but which mitigates the impact of project failure where necessary.

Project governance roles

Medium to large complex projects should consists of a project governance framework as

part of the business case and in the Project Management Plan. For complex projects, a

separate project governance document may be required to capture the complexity of a large

project group as it may incorporate a Memoranda of Understanding or complex funding

agreements between key stakeholders.

Project governance roles are a governance mechanism such that distinct roles and

responsibilities are clearly defined to ensure all parties involved in the project understand

who manages what within the project.

The three most common roles of the project governance framework are:

▪ Project Sponsor(s) or Senior Responsible Owner/Officer (SRO);

▪ Steering Committee; and

▪ Project Manager/Director.



The Project Sponsor or SRO

The Project Sponsor or SRO is the responsible and accountable person for the project and

the outputs of the project. The sponsor is responsible for ensuring that the project’s planned

outcomes and objectives at met, and that the overall project deliverable will meet the

project’s objectives.

Other responsibilities may include:

▪ Maintain project performance and setting expectations;

▪ Align and support the project team through change and manage resistance;

▪ Engage and provide awareness with project drivers; and

▪ Keep track of project funds and financial decision-making.

Steering Committee

For large and complex projects, where project initiatives have multiple areas of focus that

may be dependent on each other and the outcome and direction of the project. A steering

committee can provide a flexible project governance with dispersed authorities that are

managed separately with representatives from each authority that may come together and

make collaborative decisions and reach consensus on issues, changes and adjustment.

A typical steering committee consists of:

▪ The Project Sponsor or SRO;

▪ Senior managers or executives – representatives from each area of authority; and

▪ Project Officer/Administrator – responsible for taking minutes, circulate

communication, and monitor project progress.

Project Manager/Director

The Project Manager or Project Director is responsible for governing the project’s progress

and deliverables.

Their role is focused on the actual project, including:

▪ The planning and coordination of project effort;

▪ Communication within the team who will be delivering the outcomes of the project;

▪ Ensuring the project delivery meets the project timeframe; and

▪ Managing and coordinating the tasks and activities of the project.

Causes of governance problems

A key objective of governance is to make decisions efficiently, effectively and transparently. If

sound governance is not clearly established, the following results can occur:

▪ failure to communicate fully and appropriately on a timely basis;

▪ failure to specify or accept decision making authority and responsibilities;



▪ lack of project direction, weak leadership or lack of governance skills;

▪ non-alignment of key stakeholders;

▪ over emphasis on reporting that reduces meetings to status updates rather than

interactive decision making;

▪ confusing contract management and decision making;

▪ failure to sustain governance processes and practices through to delivery of benefits

to the organisation.

▪ poor project team cohesion or inappropriate probity practices leading to confusion,

team turn-over and low morale;

▪ poor previous experience of project governance, which means project managers do

not understand the role. This results in inadequate or inappropriate support for

effective project governance (e.g. lack of transparency, poor communication,

withholding of ‘bad news’); and

▪ imbalance in the focus on immediate project issues at the expensive of future

operational factors (for example value engineering decisions removing sustainability

measures which reduce project costs but increase future operational costs).

Effective Project Governance

According to Ross Garland, there are four key principles for effective project governance.

Four key principles for effective project governance:

1. Establish a single point of overall accountability.

2. Service delivery ownership determines project ownership.

3. Separate project decision making from stakeholder management.

4. Distinguish between project governance and organisational structures.

Source: Ross Garland, "Project Governance - a practical guide to effective project decision making" Kogan

Page (London and Philadelphia) 2009

PRINCIPLE 1: Establish a single point of overall accountability

Effective governance requires consistency of accountability across the project and

throughout its project life to ensure that decision-making is consistent with the focus of the

project, the project’s objectives and the benefits of the project’s outcome. By providing a

single point of accountability will ensure that the task of decision-making is provided by the

accountable person within the organisation or the responsible person for the outcome of the

project.

This accountable person is usually the Project Sponsor or Senior Responsible Owner/Officer

(SRO). This person is usually the chairperson of the steering committee that the project

reports to and is accountable for the decisions made by the steering committee involving:

▪ The delivery of the agreed business outcomes;



▪ The expected benefits of the business outcomes;

▪ The cost and value of project;

▪ The delivery timeframe of the project in accordance with the agreed project schedule;

▪ Risk management and mitigation strategies;

▪ Project performance and actions to ensure successful project delivery; and

▪ Determining the whether a project should proceed or be stopped if outcomes are not

achievable within the expected timeframe or at the expected cost.

PRINCIPLE 2: Service delivery ownership determines project ownership

The primary reason for investing in a project is to achieve a service outcome, and therefore

the service outcome should always be the focus of the project from an investment point-of-

view. The person accountable for the success of the project is the best person to maintain a

service outcome focus for the investment

PRINCIPLE 3: Separate project decision making from stakeholder management

When a steering committee consists of too many stakeholders and the meetings are used as

a mechanism for attendees to review project progress or to gather information, then the

purpose of the steering committee is lost when the fundamental role is to contribute towards

decision-making.

Stakeholder inputs is best to be put through a stakeholder advisory group and allow the

steering committee to take responsibilities for maintaining the direction of the project.

PRINCIPLE 4: Distinguish between project governance and organisational structures

Organisational governance is the mechanism that monitors and challenges the effective

application of resources, both physical and non-physical. Organisational structures refer to

how activities such as task allocation and coordination, can support the achievement of an

organisation’s objectives. Generally, organisational structures do not provide the necessary

framework to deliver a project and therefore project governance structures are established to

support this. Project governance structures, such as project steering committees, are

formed to enable effective project decision making.

Upon completion of the project, the accountability for the outcome will transition to

organisational governance.

Risk Management

By effectively managing the government’s exposure to risk is critical to the organisation’s

financial sustainability and is an integral part of good governance and sound management

practices. According to the Australian Standards for Risk Management, AS ISO

31000:2018, organisations must have a framework that integrates the process for managing



risk into their overall governance, strategy and planning, management, reporting processes,

policies, values and culture.

Good risk management practices include:

▪ increase the likelihood of achieving objectives and delivering government’s desired

outcomes;

▪ encourage proactive management, governance and controls;

▪ increase ability to adequately identify opportunities and threats and treat risk;

▪ improve compliance with legal and regulatory requirements and enhance health and

safety performance;

▪ improve financial reporting and management;

▪ improved stakeholder confidence and trust;

▪ provide a reliable basis for planning, priority setting, decision making and use of

resources;

▪ improve loss prevention and incident management; and

▪ improve organisational learning and resilience.

Change Control

In project management, integrated change control is a way to manage the

changes incurred during a project. Integrated change control is the described

method that manages reviewing the suggestions for changes and utilising the

tools and techniques to evaluate whether the change should be approved or

rejected.

Rare is the project that does not undergo any changes at all during its full cycle. Projects

deal with change, and they are the subject of frequent change. Change in a project is not

bad, but uncontrolled and undocumented change can bring serious consequences to a

project including termination. Change control does not mean that there cannot be any

change, but that change must be regulated with a process to ensure that only those changes

that will benefit the project’s objective are approved.

The project sponsor and any other stakeholder in the project must decide whether the

changes are worth the additional effort and cost. They must also decide if the changes are

acceptable in light of what effect they might have on the rest of the project.

A change control process documents all requested changes so that the project team can

determine what effect the changes will have in terms of effort and cost. Once the estimates

are complete, the stakeholders can accept or reject the change. The key for the project

manager is to have the authority to refuse any change if the stakeholder and/or project

sponsor decline to sign off on the effects of the change on the project whether that be cost,

resources or delivery date.



Control of Change and Scope Creep

The original plans for projects are almost certain to be changed before projects are

completed.

As a general principle, change is normally from three basic causes:

1. Uncertainty about the technology on which the work of the project or its output is

based;

2. An increase in the knowledge base or sophistication of the client/user leading to

scope creep; and

3. A modification of the rules applying to the process of carrying out the project or to its

output.

The most common changes, however, are due to the natural tendency of the client and

project team members to try and improve the product or service. New demands and

performance requirements become apparent to the client which were not realised at the time

of project initiation. New technologies become available or better ideas occur to the team as

work progresses. The later these changes are made in the project, the more difficult and

costlier they are to complete.

Without control, a continuing accumulation of little changes can have a major

negative impact on the project’s schedule and cost.

As change in a project is inevitable the project manager must control the process by which

change is introduced and accomplished. Control of change is accomplished with a formal

change control system.

The purpose of the formal change control system is to:

▪ review all requested changes to the project (both content and procedures);

▪ identify all task impacts;

▪ translate these impacts into project performance, cost, and schedule;

▪ evaluate the benefits and costs of the requested changes;

▪ identify alternative changes that might accomplish the same ends;

▪ accept or reject the requested changes;

▪ communicate the changes to all concerned parties;

▪ ensure that the changes are implemented properly; and

▪ prepare monthly reports that summarises all changes to date and their project

impacts.



FIGURE 12 CHANGE CONTROL

Change Control System

A formal, documented process that describes when and how official project documents and

work may be changed is required. A change control system describes who is authorised to

make changes and how to make them. While different organisations will have their own

procedures, it is recommended all of the following be present.

1. All project contracts must include a description of how requests for a change in the

project’s plan, budget, schedule, and/or deliverables will be introduced and processed;

2. Once a project is approved, any change in the project will be in the form of a change

order that will include a description of the agreed-upon change together with any

changes in the plan, budget, schedule, and/or deliverables that result from the change.

For any minor changes, a risk identification and analysis study should be performed;

3. Changes must be approved, in writing, by the key stakeholder(s) as well as the project

sponsor;

4. The project manager must be consulted on all desired changes prior to the preparation

and approval of the change order. The project manager’s approval, however, is not

required; and

5. Once the change order has been completed and approved, the project plan should be

amended to reflect the change, and the change order becomes a part of the new

baseline.



FIGURE 13 CHANGE CONTROL SYSTEM

For large projects a change control board may be established comprising a group

representing all interested parties that processes all requests for change. For small to

medium sized projects the process for handling change need not be as complex. The main

source of trouble is too many project managers, in an attempt to avoid excessive

bureaucracy, adopt an informal process of handling requests for change. Misunderstanding

and a lack of consistency in the decision-making process arises from this informality, and

often the project manager finds the project committed to deliver a changed output of

extended scope with no change to the project budget and schedule.



Project Communications Management



Project communications management employs the processes required to ensure

timely and appropriate generation, collection, distribution, storage, retrieval, and

ultimate disposition of project information.

Project communication management is related to general communication skills, but it

encompasses much more than the exchange of information. Communication skills are

considered general management skills that the project manager utilises on a daily basis.

Within the project the management of project communication seeks to ensure that all project

information – including project plans, risk assessments, meeting notes, and more – is

collected, documented, archived, and disposed of at the proper time. These processes also

ensure that information is distributed and shared with stakeholders, management and the

project team at the appropriate times.

Effective communication creates a bridge between diverse stakeholders involved in a project,

connecting various cultural and organisational backgrounds, different levels of expertise, and

various perspectives and interests in the project execution or outcome. When the project is

closed, the information is archived and used as a reference for future projects.

Project managers and the project team will all send and/or receive project communications

throughout the life of the project. It is important that all team members and stakeholders

understand how communication affects the project.

Successful projects require successful communication. Communication is the

key link between people, ideas, and information

Formal Communication Channels

FIGURE 14 – FORMAL COMMUNICATION CHANNELS

According to Lunenburg and Ornstein (2008), an organisation’s structure can often influence

the patterns of communication within that organisation in three distinct directions: downward,



upward and lateral/horizontal. These three directions make up the framework within which

communication takes place in an organisation.

Downward Communication

Downward communication is when the flow of communication transmits information from a

higher level to a lower level, such as from a manager to subordinates. Such form of

communication can be used to communicate new strategies and goals, providing directives

on procedure use and job instructions, or it can used to communicate performance feedback

from a manager/executive.

Upward Communication

Upward communication is providing information higher up in the chain of communication,

such as directing information from a staff member to a team leader. This may be used to

determine if the staff members have understood information sent downwards, and it can also

be used to provide information about problems, information on disputes, and feedback

during performance reviews or suggestions for improvements.

Horizontal Communication

As the size and complexity of an organisation increases, the need for communications to be

provided laterally or horizontally across the chains of communication may be necessary.

This is especially true for organisations that have sub-departments or teams that work

alongside of one another. Unlike the communicating upwards or downwards, horizontal

communication is essentially for coordination, to tie together activities cross departments

within an organisation.

Customer Relationships

While projects are often measured by whether they are completed on time, within budget, or

according to specifications, the key element is whether the customer is satisfied with what

has been accomplished. In most cases customer satisfaction is the bottom line. Project

managers need to cultivate positive working relations with all stakeholders to ensure

success.

High customer satisfaction is one of the most important goals of any project. As a general

principle when the project attempts to exceed customer expectations there are normally

additional costs. Under most circumstances, the most profitable arrangement occurs when

the customer’s expectations are only slightly exceeded. Customer satisfaction is often

difficult to measure as a client may be dissatisfied or delighted with a project may not be

based on hard facts and objective data but on perceptions and expectations.

Project managers must be skilled at managing customer expectations and perceptions. Too

often they deal with these expectations after the fact when they try to alleviate a client’s

dissatisfaction by carefully explaining why the project cost more or took longer than

expected.



Communications Planning

Communications planning determines the information and communications needs of the

stakeholders. Such planning focuses on who needs what information, when they need it and

how it will be provided. Identifying the information needs of the stakeholders and determining

a suitable means of meeting those needs is an important factor for project success.

As part of this planning it is important to consider the mode of communication and that it is

also documented. Some stakeholders may prefer a hard copy document rather than an e-

mail. Later in the project these needs change. Throughout the project, the needs of the

stakeholders, the type of information requested, and the mode of communication should be

reviewed for accuracy and updated as required.

Stakeholders will need different types of information depending on their interest in the project

and the priority of the project. The project manager will need to complete an analysis of the

identified stakeholders to determine what information they actually need and how often the

information is needed. There is no value in expending resources on generating information,

reports, and analyses for stakeholders who have no interest in the information. An accurate

assessment of stakeholders’ needs for information is required early in the project planning

process.

Communications Plan

Based on the stakeholder analysis, the project manager and project team can determine

what communications are needed. This is done through the communications management

plan. The plan usually provides:

▪ A system to gather, organise, store, and disseminate appropriate information to the

appropriate people. The system includes procedures for correcting and updating

incorrect information that may have been distributed;

▪ Details on how needed information flows through the project to the correct

individuals. The communication structure documents where the information will

originate, to whom the information will be sent, and in what mode the information is

acceptable;

▪ Specifics on how the information to be distributed should be organised, the level of

expected detail for the types of communication, and the terminology expected within

the communications;

▪ Schedules of when the various types of communication should occur. Some

communication, such as status meetings, should happen on a regular schedule;

other communications may be prompted by conditions within the project;

▪ Methods to retrieve information as needed;

▪ Escalation processes for resolving project issues that cannot be resolved at the staff

level; and

▪ A method for updating and refining the communications plan.

The complexity and duration of the project will determine whether the communication plan is

formal or informal, broad or detailed.



Communications Matrix

A communications matrix can help the project manager organise communication needs by

identifying who needs what information and when. This identifies what information should be

transferred, to whom, the means of transfer and how often it should occur. It can also be

used to assign various levels of responsibility in the communication process. The matrix

provides a quick snapshot of the communications needed for the project with the specific

detail held in the communication plan

Information Distribution

Information distribution involves making information available to project stakeholders in a

timely manner. Information distribution includes implementing the communications

management plan, as well as responding to unexpected requests for information. The

effective distribution of project communication should consider the needs and work practices

of the stakeholders to ensure maximum uptake and involvement. Project information can be

distributed using a variety of methods, including:

▪ Project meetings, hard copy document distribution, manual filing systems, and

shared-access electronic databases;

▪ Electronic communication and conference tools, such as e-mail, fax, voice mail,

telephone, video and Web publishing; and

▪ Electronic tools for project management, such as Web interfaces to scheduling and

project management software, meeting and virtual office support software, portals,

and collaborative work management tools.

Performance Reporting

The performance reporting process involves the collection of all baseline data, and

distribution of performance information to stakeholders. Generally, this performance

information includes how resources are being used to achieve project objectives.

Performance reporting should generally provide information on scope, schedule, cost,

quality, risk, and procurement.

Performance reports organise and summarise the information gathered and present the

results of any analysis as compared to the performance measurement baseline. Reports

should provide the status and progress information, and the level of detail required by

various stakeholders as documented in the Communications Management Plan

The following diagram outlines the performance reporting process – including inputs, tools

and outputs:



FIGURE 15 – PERFORMANCE REPORTING PROCESS

The Project Plan is one of the key inputs to performance reporting. Other inputs to

performance reporting are the work results. Work results can be examined and measured for

quality, time spent completing the work, and the money required to complete the work. The

work results, as progress reports or completion of work results, can be measured against the

estimates and expectations to reveal variances. This means that the collection and recording

of information is an essential element in the reporting cycle. The last inputs to performance

reporting are other project records, such minutes, product description, and other information

relevant to the project.

The outputs from performance reporting provide fundamental information on the progress of

the project. Thus, properly constructed and meaningful reports are an essential element in

project control providing clear evidence of how the project is tracking. Given the role reports

can play in the project control process a natural output of performance reporting are change

requests.

Appropriate structuring and content management together with attention to who receives

reports means that information on project progress, status and issues is communicated to all

stakeholders. This notifying of staff means that they are aware of issues and problems to be

addressed, of issues that may arise (no surprises) and what may be expected of them to

meet project milestones.

Manage Stakeholders

Stakeholder management refers to managing communications to satisfy the needs of, and

resolve issues with, project stakeholders. Actively managing stakeholder’s increases the

likelihood that the project will not veer off track due to unresolved stakeholder issues and

limits disruptions during the project. Products of stakeholder management include:

Performance Reporting

Variance Analysis

Performance Reviews

Trend Analysis

Project Plan

Work Results

Other Project Records

Earned Value Analysis

Information Distribution

Performance Reports

Change Requests

INPUTS TOOLS OUTPUTS



▪ Resolved issues;

▪ Approved Change Requests;

▪ Approved Corrective Actions; and

▪ Updates to the Project Management Plan.

Communications Strategy

Media

Different forms of media will be used during the life of the project to convey information, and

for communicating between project team members and project stakeholders. Face to face

communication is the most effective, but this may not always be feasible due to stakeholders

being separated geographically.

Project managers should give careful thought to the media used to disseminate reports.

Formal structured reports are more appropriate to reporting to senior management and key

stakeholders. Project reviews may require a special report accompanied by a formal review

meeting. Team briefings on progress and issues can be less formal.

Types of Information and Purpose

The type of information to be communicated and distributed will depend on the audience,

and the purpose for which it is being conveyed. For example, technical design documents

will be of interest to a technical committee that is chartered with reviewing and approving

design documents. Items regarding project progress and benefits would appeal more to the

non-technical stakeholder that is more interested in progress of the project, and how the end

result will affect them.

Listed below are some of the different types of reports and purpose of information to be

communicated.

Organisational Charts

The organisational chart is used to keep all project team members and stakeholders

informed of the project organisation hierarchy and reporting structure.

Risk Reports

A risk assessment prepared on a regular basis documenting known risks to the project, the

likelihood of the risk, the impact of the risk to the project, and the plan to mitigate each risk.

Status Reports

Status reports provide a snapshot of where the project is at the time of reporting. They

generally address the basic project parameters such as the Scope, Time and Cost. They

address the issue of how the project is currently tracking against its baseline.



Progress Reports

Progress reports report on progress over the last reporting period. They reflect what has

been achieved over this period and may represent an amalgam of performance reports from

individual team members. They also list any change requests submitted or approved. In

addition, the report will list what it is planned to achieve in the next reporting period. Finally,

any issues that have arisen over this period or are ongoing are listed.

Forecasting

A third type of report takes the current and past trends and performance to extrapolate

project performance to future periods. Given performance to date how long will the project

take to finish & how much more will it cost to complete the project?

Traffic Light Reports

One method of presenting project reports is traffic light reporting. These reports are

particularly useful for programme managers who rarely have time to analyse a lengthy

written report. These indicators can be used in the range of reports identified earlier.

Exception Reports are often raised in conjunction with red traffic light incidences to provide

options and analysis for the way forward. Shown below is an example of traffic light reporting

used by the Department of Environment and Water Resources.

FIGURE 16 – TRAFFIC LIGHT REPORTING



Managing Information

During the establishment of the project, the project manager should conduct a detailed

analysis to identify internal and external sources of information, and to document the

information. Records management arrangements to be adopted for the project must take

into consideration the needs of the project and the Agencies/organisations providing

information to the project. This should include the level of application of document control,

information storage, backup of hard copy and soft (electronic) copy records and documents,

and the level of documentation to be maintained.

In addition, appropriate security and confidentiality is important. This should be done in

accordance with your organisation’s privacy and security requirements. If there are costs

associated with obtaining and storing any information, they should be reflected in the project

budget.

Closure

At the end of the project, consideration should be given to the handling, disposal and

retention periods of information supplied to the project. Records Management processes

should have been in place from the beginning of the project and should utilise the

organisation’s Record Management system.

Example of a Communication Matrix Template

AUDIENCES

What

When How Responsible Sponsor Project Team

Who?

Project Kickoff Project Start (include date when planned)

Meeting Project Manager Approve Receive

Project Plan Start & Upon Updates

Document

Team Meetings Weekly Document minutes in Project Library

Project Status Reports

Monthly Report sent via e-mail

Major Milestone Announcements

As completed Email

Acceptance Testing Report

End of Test Letter

Project Close Out Report

End of Project Document



Instructions for Use

Italicized items are provided for example only. Modify content of the columns to meet project

specific needs.

▪ What – List items or occurrences to be communicated.

▪ When - Indicate when the item should be generated and or updates distributed.

▪ How – Indicate the form the communication will take.

▪ Responsible – Indicate the name of the person or team responsible for producing

and/or delivering the communication.

▪ Audiences – Add more columns as needed and replace “Who?” with names of

persons, entities or groups impacted by the communication plan. In their respective

columns, indicate an appropriate level of involvement for that person, entity or group.



Project Procurement



Project procurement is the formal process to acquire the appropriate goods and

services required by the project from an outside source that will make the best

use of the supplier’s products and/or services while supporting the objectives of

the project.

The first decision that a project manager needs to make is whether or not the project needs

to procure something or someone. This is commonly known as the ‘make or buy’ decision,

this will trigger a number of actions and outcomes, each with consequences for the project

and the various stakeholders. An assessment needs to be made as to what the needs of the

project are and whether these needs are best satisfied by going to the open market. In most

cases projects need to undertake some form of procurement.

Procurement is therefore the entire process by which resources are obtained for the project.

Careful planning is essential to achieve a good procurement outcome that will withstand

public scrutiny and satisfy the needs of the project. The resources expended on the

planning process should be consistent with the size, value and complexity of the

procurement.

Source: UNITED FEATURES SYNDICATE INC

Procurement Plan

A project procurement plan is an indispensable component of the project plan. It is required

when the decision to purchase goods and services outside the organisation has been made

by the project team. Project managers should use the procurement planning as an

opportunity to evaluate/review the entire procurement process so that sound judgements

and decision making will facilitate the success of the overall project. Procurement plans

should never be treated as static documents. To ensure their usefulness and currency they

should be constantly reviewed and updated throughout the procurement process to reflect

any changes. Any such updates should also be communicated to the appropriate

stakeholders.

A project procurement plan enables the project manager to:

▪ Identify important issues arising through the procurement cycle, and to document

how they are to be dealt with and by whom;



▪ Establish a time scale and sequence for the procurement activity – this is particularly

important if an open tender process is to be followed, as the steps required in the

process, can be time consuming;

▪ Provide a framework against which the project manager can monitor progress and

outcomes/benefits, and evaluate them so that they can take corrective action;

▪ Record the procurement methods, the proposed contractual arrangement, the

strategic objectives and the targets and performance measures; and

▪ Record project terms of reference, accountabilities and responsibilities – Project

Sponsor, Project Manager, Procurement Manager and Technical Adviser.

As part of the Project Plan, a Procurement Plan is established in the initial phase of the

project life cycle. At this point in the procurement planning steps, the Plan is little more than

a strategic vision, however, in most cases the decision to make or buy products has been

established. The Procurement Plan follows the phases of the Project Plan with various steps

and reviews as agreed with key stakeholders and the project sponsor.

The Procurement Plan should include five key steps, they are:

▪ Requirement

▪ Requisition

▪ Selection

▪ Contract Administration

▪ Closure.

Requirement

In the Requirement Step of the Procurement Plan, the project manager in conjunction with

the key stakeholders and the project sponsor conduct a “make vs. buy” analysis, and if it is

decided that the product (equipment, services, project resources, etc.) will be purchased, the

project proceeds to the Requisition Step.

Requisition

In this step, the project creates a statement of work, develops product specifications (e.g.

design, performance, functional), and identifies major milestones and creates the Request

for Offer (RFO).

Selection

The Selection Step of the Procurement Plan includes the issuing of the RFO, receipt of

offers, negotiation with vendors, evaluation of offers, and award of the contract.

Contract Administration

The next Step of the Procurement Plan is Contract Administration. In this phase, the project

manages the contract by working closely with the vendor to ensure that the contract

requirements are met.



Closeout

The last step of the Procurement Plan is Closeout. In this step, the project verifies that the

products or services have been received and are acceptable, verifies that there are not any

outstanding invoices and makes the final payment. In addition, they document and report

vendor performance problems.

Market Research and Analysis

A critical part of planning procurement is to analyse the relevant market. The results of this

analysis will have a considerable impact on most other aspects of the procurement planning

process.

Market Research

Supply market research involves developing a detailed understanding of:

▪ your organisation’s procurement needs;

▪ your organisation’s vulnerabilities in the market place;

▪ the infrastructure and capability of the present suppliers in the market;

▪ the potential for new suppliers to enter the market; and

▪ the impact that your organisation’s procurement requirements may have in the

market place.

Essentially, this means getting to know how the market works and potentially identifying key

players and building relationships with them. You also need to develop a sense of the issues

affecting the market/industry, the direction in which the market/industry is heading and what

value various suppliers and potential suppliers place on having your custom.

Market research often uncovers surprising or unexpected information, which must then be

included in the procurement planning process. The supply base is dynamic, with most

markets evolving significantly over time. Your market information should be frequently and

regularly reviewed and updated to ensure that the latest state of the market is reflected. For

strategic supply markets, a regular, structured program of market research should be

considered, consistent with cost/benefit principles.

Market Analysis

Once you have researched the market you need to analyse the information you have

gathered to determine what impact it is likely to have on your procurement process and how

it should be incorporated into your procurement plan.

For example, the information generated from market analysis is likely to influence factors

such as:

▪ The choice of procurement method;

▪ The timing of the release of tender documents;

▪ The schedule for completion of the procurement process;



▪ The amount of resources required to run the procurement activity;

▪ The need to appoint a probity adviser; and

▪ The content of the Statement of Requirements document.

Inadequate market information when making decisions on the above issues can seriously

detract from the success of the procurement activity and consequently, the achievement of

value for money.

Risks Associated with the Market

Market analysis should include an analysis of any risks associated with the market as a

whole. Some of the market circumstances that may require closer attention to the associated

risks include:

▪ existing or potential monopolies;

▪ immature markets (e.g. for the supply of newly required services or technology);

▪ highly aggressive and competitive markets;

▪ markets with a record of or the potential for collusive practices;

▪ market resource shortages; and

▪ market wide price fluctuations.

Opportunities Associated with the Market

Most discussion on risk in procurement focuses on the problems with poor management

failing to manage for potential threats. Good risk management processes also provide scope

for enhancing benefits and taking up opportunities. In the process of supply market analysis

this could include issues such as:

▪ the identification of new and possibly better value for money suppliers;

▪ identification of new and developing products, services and technology that may

assist in achieving the business objectives of the buying organisation;

▪ identification of other existing and potential public sector buyers in the market and the

possibility of co-operative buying arrangements; and

▪ identification of possible future trends facilitating appropriate timing of the

procurement activity. (e.g. market intelligence may indicate likely future price

decreases, suggesting it may provide a better value for money outcome to delay any

proposed purchases; conversely, the prospect of future price rises might provide the

impetus to hasten procurement activity.)

Organisational Support

A factor critical to the success of complex procurement activities is obtaining the appropriate

level of organisational support. This involves:

▪ abiding by organisational approval and delegation requirements;

▪ obtaining project sponsor support; and



▪ ensuring stakeholders are consulted and involved throughout the process.

Approvals

In procurement planning it is important to identify and include the accountability measures

and approval points to be undertaken in the procurement process. There are a range of

legislative and accountability mechanisms that apply to organisational procurement activities

and which aim to ensure probity, transparency and fair process.

Your Organisation’s Delegations

Provided they meet legislative requirements, organisations can develop whatever

procurement approval regime best meets the requirements of their business while achieving

accountability and transparency in their procurement processes.

Planning for Approvals

The points where approvals are to be exercised should be clearly delineated in procurement

plans. There may also be other approvals required in addition to the legislative requirements

depending on the complexity of the requirement and individual organisation procedures.

Typical points where these may be exercised include:

▪ sign off on the draft Statement of Requirement or specification;

▪ evaluation plan and appointment of evaluation team;

▪ other sub-plans such as probity, risk management and communication;

▪ the procurement method selected;

▪ proposal to conduct industry briefings or site inspections;

▪ release of Request for Offer documentation to industry;

▪ short listing of tenderers;

▪ acceptance of evaluation team’s recommendation of the preferred tenderer; and

▪ contract signature.

Steps in the Procurement Process

The steps undertaken in any complex procurement activity will and should generally vary

depending on such factors as the nature of the requirement, the nature of the market and

relevant policy and legislation. Every complex procurement activity needs to be individually

planned, with critical thinking applied to each stage of the process.

The following list of activities will be common to most complex procurement activities:

▪ Identifying the need;

▪ Obtaining approval and funds availability, as per internal policy;

▪ Assessing the market;

▪ Preparing a Statement of Requirement;

▪ Developing the Request for Offer documentation;



▪ Obtaining approval for the procurement method selected;

▪ Developing the tender evaluation criteria and methodology;

▪ Advertising the Request for Offer opportunity;

▪ Receiving offers;

▪ Evaluating offers;

▪ Recommending the preferred supplier;

▪ Conducting contract negotiations;

▪ Signing the contract;

▪ Debriefing tenderers;

▪ Publishing the contract on AusTender;

▪ Managing the contract;

▪ Evaluating the procurement activity; and

▪ Disposal of assets.

The above steps are provided as a guide only. They may differ significantly from

organisation to organisation and from activity to activity.

Procurement Methods

There are three basic procurement methods available for complex procurement:

▪ Open tendering; and

▪ Limited tendering.

There are also a number of procurement arrangements and contracting methodologies that

can support these core procurement methods.

They include:

▪ Staged procurement;

▪ Standing offers; and

▪ Panel provider arrangements;

Open Tendering

Open tenders allow the opportunity for any interested party to bid for the requirement. An

open tender will require some form of public notification designed to ensure a high level of

awareness of the opportunity and an adequate level of suitable responses. This may include

advertising in major newspapers, trade journals and organisation web site.

The advantages of running an open tender process include:

▪ many possible sources of supply will be attracted, providing the best opportunity to

find the best solution;



▪ a wide range of potential suppliers will tend to encourage competitive offers and

provide a value for money solution; and

▪ reduction in the possibility of eligible suppliers lodging complaints for missing out on

the opportunity to bid.

The disadvantages of running an open tender process include:

▪ the number of bidders can become too large for the tender administrator to manage;

▪ because of the large number of tenderers, the process can be very time consuming,

especially in the evaluation stage; and

▪ ample time needs to be allocated for all potential suppliers to become aware of the

opportunity and prepare their bids.

An example of a purchase for which an open tender might be suitable would be a

tender to provide a new suite of office application software for a whole

organisation.

Limited Tender

Limited tender involves an organisation approaching one or more potential suppliers to make

submissions.

Monopoly Providers

A common situation where organisations may seek to run a limited sourcing process is

where there is a monopoly provider. This situation can represent a high risk procurement

environment for the Organisations. Even if there is only one provider in a market place, it is

still good practice to prepare and issue a full RFT or other purchasing document. This is to

ensure that the Organisations’s requirements are fully documented. It is also a form of risk

management as the Organisations can quickly see where the monopoly provider is weak or

non-compliant with requirements and can plan to manage these problem areas accordingly.

When faced with a monopoly provider, procurement staff may fear that they will not be able

to obtain value for money. Whilst it is difficult to determine whether value has been obtained

when there is no competition, it is not impossible. Cost investigation of monopoly provider

quotations is usually undertaken in order to determine the reasonableness of the prices

tendered. This involves carrying out checks to determine the cost of materials and labour, as

well as determining reasonable margins for overheads, profit margins and contingency. This

approach requires cooperation from the provider and suggests a more advanced model of

provider partnering and the use of benchmarking data. It also imposes a duty on the

purchaser to deal sensitively with the commercial information provided by the monopoly

provider.

Another method of checking value for money involves comparing the price quoted by the

monopoly provider with the prices charged by providers of similar or related services. This

data can then be used to gain an understanding of whether the prices tendered by the

monopoly provider are reasonable. This will require some lateral thinking in order to identify

similar services that are available in the market place.



Multi-Stage Procurement

For complex and high cost procurements, a staged approach involving a structured series of

selection processes will generally be desirable to secure best value for money, improve

communication, reduce areas of uncertainty and eliminate unnecessary costs.

One of the most common reasons for conducting multi-staged procurement is to provide an

initial screening of responses and develop a short list of “qualified” providers who are then

invited to proceed to the second stage of the process by participating in a prequalified tender

or quotation process. Providers are shortlisted on the basis of those who are assessed in

the first stage as having a reasonable chance of being able to meet the requirement. It is

advisable to keep the information requirements of the first stage as brief as possible to avoid

putting tenderers to the expense and inconvenience of responding to two full tenders.

Staged procurement may be used where:

▪ the requirement is unknown or unclear, cannot be adequately defined or may be

capable of solution in several ways;

▪ the requirement is generally known to buyers and suppliers but the objective and

proposed method of solution need considerable analysis, evaluation and clarification;

▪ the requirement is of a developmental nature to meet a particular need and involves

a pilot study;

▪ the complexity of the requirement, or its potential for large costs in the process of

tender preparation and evaluation, make it necessary or desirable to shortlist the

most competitive suppliers, and to improve all qualified parties’ understanding of the

project;

▪ it is necessary to qualify suppliers for security reasons or to ensure adequate

standards of service capability; and/or

▪ it is necessary to qualify goods and services to defined standards

Each stage should have a clearly defined purpose. Buyers should make short-listing or

selection decisions against criteria specifically related to the requirement. In every case, the

aim is to reduce costs and uncertainties to ensure the best possible solution at the lowest

reasonable cost. Because a poorly managed staged approach could extend to the

contracting process, buyers should plan staging well in advance to minimise delays for

themselves and suppliers.

An example of an activity that would be suitable to use a staged process would

be a major capital equipment acquisition. The purchasing agency is certain that

there are many potential providers who would be interested in this activity but is

not sure of the capacity or viability of all these providers

Standing Offers

A Standing Offer is a continuing offer or agreement by a supplier or suppliers to provide

goods and/or services for a predetermined length of time, usually at a predetermined price (a

Deed of Standing Offer is a legally enforceable agreement that operates under the same



general premise as a Standing Offer). Standing offers are established to facilitate repetitive

acquisition of goods and services over a specific period on agreed or set terms and

conditions, as the need arises. Until an order (purchase order, service order, official order,

or work order) is placed against a Standing Offer neither party has an obligation to purchase

or supply the agreed goods or services. Placing an order ‘draws down’ the terms and

conditions agreed to in the Standing Offer, creating a legally binding contract.

Organisations may use standing offer arrangements for a range of commonly used goods

and services for their own use.

The advantages of Standing Offers include:

▪ organisation resources are used more efficiently by avoiding duplication of tendering

processes; and

▪ providing leverage for negotiating the terms of the contract because of the volume of

business involved

Panel Arrangements

In principle, Panel arrangements are a particular form of Standing Offer. They usually involve

running a competitive process to select a number of suppliers who are considered suitable to

provide a particular type of service commonly required by the department. Purchasers

requiring those services can then either directly engage any supplier on that panel or can run

a competitive process restricted to all or some selected panel members. Often panel

arrangements are used as method of pre-qualifying suppliers so that lengthy open tendering

processes are not required to be run every time any area within the department requires

those services.

Some examples of where panel arrangements might be suitable include:

▪ business consultancy services such as legal and accountancy services;

▪ where security clearances of contractors are required e.g. for work in intelligence

organisations;

▪ human resource and training providers; and

▪ project management support services

Corporate Contracts

At times an organisation will set up and administer a Corporate Contract on behalf of the

organisation. For example, setting up a corporate contract for credit cards enables the

organisation to negotiate better terms and conditions than each individual member who may

need to use a credit card within the course of their work could. This approach also ensures

that the required need is set up by people who understand the specialised nature of the

purchase.



Different Types of Requests for Offers

The Request for Offer (RFO) is the primary document issued when seeking offers. It

provides the basis on which potential suppliers can prepare proposals that can then be

evaluated to determine the extent to which they represent value for money.

Request for Offer is a generic term used to cover the different forms of documents and

processes used to approach the market. The most commonly recognised and often used

form is the Request for Tender (RFT). However, depending on the nature of the requirement

and the available supply market other methods may also be used. These include:

▪ Request for Quotation (RFQ);

▪ Request for Expression of Interest (REOI) or Invitation to Register Interest (ITR);

▪ Request for Proposal (RFP); and

▪ Request for Information (RFI).

Statement of Requirement

Once a need is identified it must be properly specified before procurement action can begin.

This is usually done in the form of a Statement of Requirement (SoR) and/or specification.

A Statement of Requirement (SoR) is:

▪ an accurate statement or description of objectives or needs;

▪ the means of communicating requirements to potential suppliers in a way they can

readily understand and respond to;

▪ the basis for seeking supplier responses;

▪ the framework for evaluating the suitability of offers received from those suppliers;

▪ a major basis for the contract entered into between buyer and seller; and

▪ protection for the buyer against allegations of bias.

The SoR defines what the organisation is seeking to acquire and consequently what the

supplier is expected to provide. While SoRs should be as explicit as possible in defining

requirements and associated standards, buyers should avoid over specifying as it can

disadvantage potential suppliers, reduce the chance of receiving innovative bids and deter

new or smaller potential suppliers from making bids.

The SoR should also include coverage of issues such as:

▪ the purpose of the goods or services;

▪ the background to the requirement;

▪ the scope of the requirement;

▪ delivery point and time;

▪ documentation requirements;

▪ relevant standards and specifications;



▪ inspection, installation and maintenance requirements;

▪ packaging;

▪ quality assurance requirements;

▪ security;

▪ testing requirements;

▪ training;

▪ warranty requirements;

▪ performance levels to be achieved; and

▪ performance indicators and required contract outputs.

Specifications

In addition to the SoR, a specification may be used on complex procurement requirements

where a detailed technical or functional explanation is required.

There are three main types of specifications. They can be used singularly or a combination

specification is possible, e.g. a functional specification with technical constraints included.

Functional and Performance Specifications

These specifications state the functional requirements of the goods or services being

purchased. They outline what the goods or services are required to do. They focus on what

is to be achieved rather that how it is to be done. They do not describe the method of

achieving the intended result. This enables the supplier to identify solutions to defined

problems.

Performance specifications state the requirements in terms of how effectively the end

product or service needs to perform. Like functional specifications, performance

specifications define the task or desired result by focusing on what is to be achieved.

Performance specifications are used where the output of the contract is more important than

the purchase of a particular item and can be applied to a wide range of purchases such as

equipment, information technology or service contracts.

Technical or Material Specifications

These are specifications that define the technical and physical characteristics and/or

measurements of a product, such as physical aspects (for example, dimensions, colour and

surface finish), design details, material properties, energy requirements, processes,

maintenance requirements and operational requirements. They should only be used when

functional and performance characteristics are insufficient to define the requirement.

Exemplar Specifications

This type of specification details a known suitable product and states “or equivalent”. Every

attempt should be made to avoid these specifications as they are extremely biased.

Occasionally their use may be valid for reasons of compatibility or standardisation.



Tender Evaluation Planning

The Tender Evaluation Plan (TEP) is prepared in advance of approaching the market for

obvious probity reasons and should be prepared in conjunction with the RFT documents.

The TEP contains details of the proposed approach to evaluating the tender, including the

evaluation criteria and methodology and information about the key roles and responsibilities

of people who will participate in the tender evaluation.

Evaluation Criteria

Tender evaluation criteria should be determined early in the procurement process and

included in the Request for Offer and the Tender Evaluation Plan. Evaluation criteria provide

the basis for a systematic assessment of offers, with a view to selecting the best in terms of:

▪ compliance with specification requirements;

▪ suitability for procurement objectives;

▪ the value of each bid's specific features; and

▪ overall value for money.

To meet these outcomes, criteria need to be carefully framed and must encompass all

elements of the Request for Offer in which they are included. It is essential that evaluation

criteria are determined before offer evaluation, and that there are no changes or additional

criteria included during the evaluation process. This facilitates the evaluation process by:

▪ ensuring that the request for offer elicits the information needed for meaningful and

consistent evaluation of offers;

▪ helping to ensure that the process is fair, and is seen to be fair, by all players; and

▪ providing a defensible foundation for the debriefing of unsuccessful suppliers.

Sample Evaluation Criteria

The following are examples of broad evaluation criteria that might be used on complex

procurement activities:

▪ The tenderer’s degree of overall compliance with the RFT;

▪ The extent to which the tendered solution is assessed as meeting the draft Statement

of Requirements;

▪ The extent to which the tenderer is compliant with the draft conditions of contract and

the assessed level of risk relating to the negotiation of a contract acceptable to the

Organisations;

▪ The proposed corporate structure and financial and corporate viability and capability

of the tenderer and Subcontractors to fulfil contract obligations; and

▪ The tendered prices and pricing structure, including the proposed payment schedule.

While providing reasonably broad coverage, the above list is not exhaustive and other issues

may be applicable to particular procurement activities. It is likely that the more complex the



activity, the more substantial will be the number of evaluation criteria required to ensure a

thorough value for money assessment of the tenders.

In addition to the evaluation criteria, many complex procurements will provide further

guidance on the relative importance of requirements in the SOR and/or specification – that

is, some requirements may be designated as essential while others may be designated as

desirable or highly desirable.

Essential Criteria

These criteria indicate a requirement without which the achievement of the capability would

not be possible. There is no latitude in complying with an “essential” requirement and failure

to meet such a requirement would exclude an entire tender from further evaluation.

Essential criteria are exactly that – the tenderer must clearly demonstrate that their offer

provides the features listed as essential in order for their tender to remain under

consideration. Essential criteria allow the purchaser to define the minimum requirements for

the purchase. If these requirements are not met, then the purchaser would not wish to

proceed with the purchase as it would not be suitable for the intended purpose. In this

regard, essential criteria can be regarded as providing a safety net underneath the

procurement process, or hurdle over which all tenderers must pass in order to be eligible for

further consideration.

Essential criteria are pass/fail, go/no go criteria and are not normally weighted. The tenderer

either meets the criterion or does not meet the criterion. Intelligently set essential criteria can

assist in managing tender evaluation workload as they make it possible to reject unsuitable

offers early in the process and thus save evaluation time and effort on a tender which was

realistically never going to meet the organisation’s needs.

If a tenderer does not meet an essential criterion, their tender must be excluded

from any further consideration.

Therefore, it is imperative that the purchasing organisation is reasonable and

realistic in establishing which criteria should be essential

It has happened on many occasions that when tenders have been opened, the purchasing

organisation has discovered that no tenderer can meet the essential criteria that were

established for the tender. In this case there is no alternative but to terminate the tender

process and start again. Even the option of fully re-opening the tender process to anyone

who wished to join it is not preferred as those tenderers who initially responded to the RFT

would have had a longer period of time to make their responses. It is not possible to simply

relax one or more of the criteria and continue to evaluate. This is because such action may

be seen as “unfair, deceptive and misleading”. Some tenderers may have decided, on the

strength of the original criteria, not to respond to the RFT. Such tenderers would now be

unfairly disadvantaged by a relaxation of requirements, unless the tender is terminated and

recalled.

A final message on the use of essential criteria is to ensure that what is intended to be

essential is clearly designated as such. There has been some controversy over whether the



use of the words such as “shall” and “must” throughout the Request for Offer constitutes an

essential requirement. To save confusion it may be preferable to make greater use of the

word “should” if the desired result of any failure to address or meet the requirement would

not be automatic exclusion. It may also be appropriate to ensure that essential requirements

are spelled out more strongly than using “shall” and “must”. For example, including the

statement that the requirement or criterion is essential and failure to meet or address it will

result in the tender being excluded from further consideration.

Highly Desirable Criteria

Important criteria indicate a requirement which is necessary to achieve the intended

functionality and/or performance. While there is some latitude in complying with a highly

desirable requirement, failure to meet a number of such requirements would normally

exclude a tender from further evaluation.

Desirable Criteria

Desirable criteria indicate a requirement which is not a key factor in the achievement of the

intended functionality and/or performance, but which is perceived as beneficial. The

provision of “Desirable” requirements is discretionary on the part of tenderers, however,

where provided they must represent value for money.

The desirable criteria are exactly that – characteristics which are not essential, but which

make a particular offer more attractive in terms of providing a value for money solution. Each

tender response that has survived the assessment of compliance with Essential criteria is

then assessed for how well it meets the Desirable criteria. The overall value package is then

considered to determine the offer that provides the best overall value for money.

Highly Desirable and Desirable criteria can be weighted (if a weighted scoring method is

being used) to indicate their relative importance to the value for money equation.

Evaluating Offers

The evaluation of offers requires an understanding of the framework in which it is conducted.

This includes the overarching procurement framework of your organisation but also includes

more specific issues such as procurement plans, relevant organisational policy, tendering

law and probity guidance.

The objective of evaluating tenders is to select the best tender response in terms of

compliance with the specification, compliance with policy requirements and overall value for

money. This is done in comparison with the other tender responses received.

Screening of Tenders for Compliance

In this step, each tender is checked for compliance. The aim of this step is to screen out

offers that do not meet the Conditions of Tender. Offers that are not fully compliant may be

excluded from any further consideration, so it is important that this step is completed

impartially, fairly and professionally.



Sometimes it is necessary to apply common sense to this process or there may be a real

risk of eliminating all tenders on technicalities.

Screening for Failure to Meet Essential Criteria

The next step in the evaluation process is to check each offer for compliance with any

essential criteria contained in the tender. Any offer not meeting the essential requirements

should not be considered further, regardless of how effectively it may address the desirable

criteria. In some cases, all offers received have failed to meet essential requirements,

usually as a result of over-specifying requirements or inadequate market research on the

part of the purchasing organisation. Should this occur, the only real choice is to review the

specification, make necessary changes to the scope or functional requirements and then

issue a new RFT for the revised requirements.

Shortlisting

Shortlisting may be omitted for smaller purchases or one stage methods of procurement. In

these cases, the evaluation process moves directly from the screening stage to detailed

evaluation of individual offers. Where applicable, shortlisting is used to eliminate offers

which, whilst meeting the conditions of tender and the essential criteria, are clearly not

competitive and have no reasonable prospect of exhibiting value for money when compared

to other offers. These offers are not necessarily rejected at this stage of the process but may

be set aside from further evaluation unless it becomes necessary to revisit them again later

during the evaluation.

The main reason for shortlisting is to ensure that only offers which demonstrate a reasonable

likelihood of providing value for money are subjected to the full evaluation process. It is

essential that the criteria used to shortlist serious contenders be applied fairly and equitably

to all offers. A proper audit trail should be maintained for all shortlisting decisions. It is also

good practice to obtain approval from the relevant delegate for any shortlisting decisions.

Detailed Evaluation of Tenders

This stage of the evaluation process involves detailed analysis of each tender, clause by

clause, against the evaluation criteria. Evaluation of tenders should be conducted by

applying only the evaluation criteria notified to tenderers in the RFT documents and included

in the tender evaluation plan. It is therefore extremely important to ensure that the

information requested from tenderers at the time of seeking offers is sufficient to enable a

detailed evaluation of tender responses to be made.

A detailed evaluation is conducted by:

▪ applying the planned evaluation tools and methods;

▪ clarifying any ambiguity in tender proposals;

▪ tenderer reference checks; and

▪ site visits of tenderer’s premises (optional).



The Tender Evaluation Report

After completion of the comparative evaluation, it is normal to write up a detailed evaluation

report for presentation to the appropriate delegate within your organisation so that the

selection of a provider can be confirmed. The report should conclude with a justified ranking

of tenders received, and a supported recommendation as to a preferred provider. This

recommendation will be considered by the delegate in reaching his/her decision.

It is important that the tender evaluation report clearly state the recommendation for delegate

approval and subsequent action. Such recommendations may include:

▪ that a particular tender be accepted;

▪ that negotiations commence with one or more tenderer/s;

▪ that none of the tenders be accepted; and

▪ that re-tendering action be commenced.

The tender evaluation report and the recommendations contained therein are normally

prepared for the approval of the relevant delegate. As the delegate normally has the

discretion to accept or reject the tender evaluation committee’s recommendation, it is

extremely important that this approval be obtained before notifying the tenderers of the

outcome or commencing any negotiations with the preferred tenderer/s.

Negotiation with Preferred Tenderer/s

Negotiation has the potential to improve the procurement outcome by reducing uncertainties,

risks and costs. Normally the focus of negotiations is post-tender so that agreement can be

reached before a contract is formed. During post-tender negotiations the Organisations

seeks to improve tenders through a structured and ethical process.

Post-tender negotiation is required for most complex procurement activities. This negotiation

may be very simple e.g. sorting out a few minor issues over the telephone or via email, or

may be complex with multiple face to face negotiation sessions attended by large teams

representing each of the parties. Either way, the negotiation process should be well planned

and documented.

Under no circumstances should any work commence until contractual

arrangements are formalised and delegate approval has been given

Once approval has been given, a contractual agreement may then be entered into,

establishing a formal liability for the organisation and a binding obligation on the supplier to

deliver the required goods or services as set out in the contract.

Notification

Following the award of a contract, organisations should promptly inform all tenderers of the

tender decision and on request provide an unsuccessful tenderer with the reasons its



submission was not successful. On request, debriefings should also be provided to

successful tenderers.

The debriefing should provide the key reasons why the unsuccessful tenderers were not

selected and provide guidance for future bids. All information to be provided is on the

unsuccessful tender only; no comparisons are to be made with other bids. The information to

be provided includes:

▪ an explanation of why the submission was unsuccessful;

▪ identify the areas of weakness or non-compliance in the offer;

▪ provide suggestions on how to improve future submissions; and

▪ if the successful supplier has been agreed, provide the name of the successful

supplier and the total value of the agreed contract (under no circumstances if the

winning tenderer’s price to be broken down).

Registering of the Contracts

All organisations should register the awarded signed contracts in accordance with the

internal policy and frameworks.



Manage the Contract



The management of any contract needs to be carefully planned to ensure risks

are managed, the appropriate level of resources are allocated to the contract

management task and the performance of the contract is monitored.

It is important that the project manager and/or the designated contract manager fully

understand the background to the contract. This may be straightforward if they have been

involved in the whole procurement process to date but this often not the case. The contract

manager should be fully briefed by those who have been responsible for selecting the

contractor and running the procurement process. The contract manager should also take the

time to examine the records relating to the selection of the contractor as well as any files

from previous relevant contracts. It is important that the links between the contract and the

overall project are well understood. This includes updating the risk register, project schedule

and any new reporting required.

Analysing and Understanding the Contract

The next step in the contract management function is to carefully read, analyse and

understand the contract with the view to developing a comprehensive contract management

plan.

Proper analysis and understanding of a contract requires that each contract clause should

be read and the following issues determined:

▪ What does the clause require to be done?

▪ Is it an ‘active’ clause requiring action, or a ‘background’ clause establishing \rights or

the legal framework?

▪ Who is required to perform the action?

▪ Either way, who is responsible for checking that everything the clause requires is

being done?

▪ What are the consequences if a required action is not done or not done properly?

Active clauses include those dealing with issues such as payment, delivery, acceptance and

reporting. Background clauses include intellectual property, confidentiality, severability,

applicable law and survivorship. There may also be overlap between active and background

clauses - for example, confidentiality clauses that require the action of confidentiality deeds

to be executed.

Careful reading and analysis of the contract should facilitate the development of a contract

management plan.

The Contract Management Plan

A contract management plan should be documented and appropriately disseminated to the

contract management stakeholders. The Contract Management Plan should be treated as a

dynamic document that may be modified throughout the life of the contract.



The level of detail contained in a contract management plan should be commensurate with

the complexity of the contract. Your organisation may have a template available to assist

with developing a contract management plan.

The typical content of a contract management plan should address:

▪ Background to the procurement

▪ Contract scope

▪ Roles and responsibilities of contractor and Commonwealth staff

▪ Communication processes (with the contractor and other stakeholders)

▪ Transition arrangements (in and out of the contract)

▪ Measuring and monitoring performance

▪ Risks and risk management strategies

▪ Administrative and financial arrangements

▪ Inspection and audit requirements

▪ Dispute resolution procedures

▪ Variation processes and approval requirements

▪ Reporting requirements

Monitor and Maintain the Performance of a Contract

Good contract management requires a sound regime of ongoing performance measurement

and monitoring. The performance measurement and monitoring systems should be

established in the contract negotiation phase, clearly documented in the contract terms and

conditions and further specified in any contract planning documentation.

Performance Measurement

It is essential that the performance measurement approach be finalised before the contract

price is agreed and the contract signed. This allows providers a fair opportunity to

accurately cost the performance requirements for a particular job. If providers have been

able to adequately consider appropriate performance measurement processes and costs

associated with meeting these standards, they will be more likely to comply with

performance measurement and monitoring arrangements. The Commonwealth may

unintentionally cause contract management difficulties for itself by naively expecting

providers to accept performance measurement and monitoring arrangements which were not

previously agreed and costed into the contract.

Developing a System for Performance Measurement

There are some fundamental qualities associated with good performance measures. When

deciding how a provider’s performance should be measured, the buying agency should

ensure that the indicators and measures chosen meet the following considerations:



▪ Completeness - all significant aspects of the service should be included in the

measurement of performance.

▪ Clarity - the purchaser and provider should have the same understanding of the

performance measures to be used.

▪ Measurability - performance requirements should be expressed in measurable

terms, and should be based on data which it is possible to gather in a cost effective

manner.

▪ Focus on outcomes - specifications should be focused on the Australian

Government’s purchasing goals and objectives (which translate to outputs and

outcomes), not on processes.

Victoria’s Integrated Court Management System

Victoria’s integrated court management system project has run 14 months over

time and at least $12 million over budget, partly due to poor supplier

performance, the Victorian Auditor General has found.

The system was supposed to establish one technology platform and set of

applications for all Victorian courts and tribunals. The 2005/2006 budget

allocated $45 million for its development and implementation. The program was

started in 2005 and was scheduled to finish in June 2009. Yet only two of five

project parts have been finished, with final completion now not expected until

August 2010. The completed segments, relatively minor parts of the project, are

increased audio visual capability for courts and an online knowledge system for

judicial staff.

The work remaining to go includes the largest part of the project, implementing a

case management system, as well as providing web-based services such as

document lodgement and creating a courts data warehouse, the auditor said.

The report said the capital cost of the program has increased from $32.3 million

to $44 million, a 36 per cent rise. As at March 2009, $28 million of he allocated

$32.3 million in capital funds has been spent. Only seven million of the planned

$13 million in operating expenses for the project has been spent because of

delays. The department thinks that the running costs will be increased by almost

$4.6 million when the new deadline is reached.

Right from the start, the department made errors, which said that it had not

analysed the ability of the industry to meet its requirements or assessed the

program costs adequately. It ditched its plan of adapting an existing system

operating in the Victorian courts to instead adapt a new system with an

inadequate review to back up its reasoning. It also decided to have individual

contracts with the integrator, Oakton ($3.9 million) and the case management

system supplier, which was US-based Maximus ($14 million) and now is

Canadian-based Constellation Software. This limited Oakton’s ability to manage

the supplier, according to the auditor, leaving the responsibility at the

department’s door, something it needed specialist resources to deal with.

“Unsatisfactory supplier performance (Maximus is not directly named) has been

a major factor in the time and cost overruns.” Not only did the supplier not meet

timelines, the fact that Maximus sold its CourtView system with other assets to



the Canadian company mid-project meant the Department of Justice has to hold

negotiations with the owner, which were concluded in April 2009.

The auditor believed the department hadn’t conducted adequate due diligence

on whether Maximus was able to fulfil its commitments, which the auditor

considered to be particularly important since the supplier had been undertaking

significant work on its case management system back in the US. The auditor

noted that the department had put performance guarantees and received

“significant compensation” from the supplier to offset some of the costs of the

delayed delivery.

Closure of a Successfully Completed Contract

After both parties have successfully completed their respective obligations under the

contract, and final payment has been effected the contract comes to a natural close. This is

the most common reason for ending a commercial contract. A formal contract closure

process should be undertaken at the end of all contracts.

Some of the tasks that must be undertaken in contract closure include:

▪ transferring responsibility and documentation;

▪ verifying completion of all contractual obligations;

▪ completing records;

▪ post contract review, analysis and reporting;

▪ documenting lessons learned; and

▪ releasing or reassigning resources.

Contract closure typically has two main components. The first aspect of contract completion

occurs at the completion of the work itself. The second stage occurs when all warranty,

redevelopment, review or similar commitments have been finalised. It is important to

recognise that these latter tasks may not be met until some time after the initial work has

been completed, and that the contract cannot be closed until such time as these continuing

obligations have been discharged.

Review and Evaluation of Completed Contracts

A crucial and often neglected step in contract management is the process for reviewing and

evaluating a contract. While regular evaluation of contract performance should be ongoing

throughout the duration of the contract, it is good practice to conduct a full and complete

review and evaluation when the contract has been completed. Evaluation can not only be

used to improve future contract management activities but can also be used to demonstrate

a commitment to accountability for contract outcomes.

As with the planning and management effort, the evaluation effort should be commensurate

with the value and complexity of the contract. The need to undertake a detailed evaluation

may also increase if the expected outcomes of the contract have not been achieved.



Capturing Lessons Learnt

Review and evaluation can identify weaknesses in the contract management process, and

strengths and lessons that can be applied to other contracts. The lessons learnt from these

reviews should be documented and reported to senior management and to contract

management staff.

Consideration should be given to how best to capture and communicate the lessons learned

from a contract evaluation so that can form part of the organisation’s corporate knowledge.

Depending on the nature of the organisation and its knowledge management processes,

some of the most effective methods may include:

▪ Dissemination of hard copy evaluation reports to key stakeholders;

▪ The creation and maintenance of an electronic database that can be accessed by

staff involved in the management of contracts;

▪ Presentations and seminars; and

▪ Web based publishing of evaluation reports.

Providing Feedback

The results of any evaluation should also be used to provide feedback to those who played a

role in achieving (or not achieving) the contract outcomes. The supplier should be advised

of the overall assessment of their performance and thoroughly debriefed on any perceived or

actual shortfalls in their service delivery. They should also be given the opportunity to

respond to any negative feedback.



Project Management Integration



Project management integration is a collection of processes required to ensure

that the various elements of the project are properly coordinated. It involves

making trade-offs among competing objectives and alternatives to meet or

exceed stakeholder needs and expectations

What is Project Integration Management?

FIGURE 17 PROJECT INTEGRATION MANAGEMENT

In the project management context, integration includes characteristics of unification,

consolidation, articulation, and integrative actions that are crucial to project completion,

successfully meeting customer and other stakeholder requirements, and managing

expectations. Integration, in the context of managing a project, is making choices about

where to concentrate resources and effort on any given day, anticipating potential issues,

dealing with these issues before they become critical, and coordinating work for the overall

project good.

The integration effort also involves making trade-offs among competing objectives and

alternatives. The project management processes are usually presented as discrete

components with well-defined interfaces while, in practice, they overlap and interact in ways

that cannot be completely detailed in any guide.

The key to overall project success is good project integration management.

The need for integration in project management becomes evident in situations where

individual processes interact. For example, a cost estimate needed for a contingency plan

involves integration of the planning processes described in greater detail in the budgeting

and management of project cost processes, project scheduling processes, and project risk

management processes. When additional risks associated with various staffing alternatives

are identified, then one or more of those processes must be revisited. The project

deliverables also need to be integrated with ongoing operations of the organisation, or with



the long-term strategic planning that takes future problems and opportunities into

consideration.

Most experienced project managers know there is no single way to manage a project. They

apply project management knowledge, skills, and processes in different orders and degrees

of rigor to achieve the desired project performance. However, the perception that a particular

process is not required does not mean that it should not be addressed. The project manager

and project team must address every process, and the level of implementation for each

process must be determined for each specific project.

Core and Facilitating Functional Areas

Integration involves the management of the other eight areas of project management and

making trade-offs among competing objectives and alternatives in order to meet or exceed

project objectives throughout the project life cycle, taking into consideration the often

conflicting influences of the internal and external environments.

It is here that the project manager ties together and ‘integrates’ the following:

▪ Project Charter;

▪ Project Scope;

▪ Project Management Plan;

▪ Executing process;

▪ Monitor and control process;

▪ Integrated Change Control; and

▪ Project Close.

While Project Integration Management seems on the surface to be nearly all-inclusive, it is

actually up to the project manager to make that judgment.

The Internal Environment

A Project Manager always needs to be cognisant of the internal organisational environment

in which the project is being conducted. Throughout the project, regular checks should be

made to ensure the project is still aligned with corporate goals, business priorities and other

related projects.

The ongoing consultation with, and management of, internal stakeholders, will be an

important integration activity; especially as stakeholders will often have changing or

conflicting requirements.

The External Environment

Project integration will also require the project manager to constantly consider the impact of

the external environment. The more immediate external environment will include contractors

and customers who must be treated as important stakeholders in terms of consultation and

expectation management.



Other influencing factors in the external environment may include regulatory authorities, the

community in general and the political, social, economic, and natural environments. Good

integration skills require the project manager to be aware of any changes in the external

environment that may impact on the project.

Phases and Phase-Gates

One mechanism that can be employed by project managers to help with integration is to

break the overall objectives of the project into shorter term objectives and to focus on

achieving the sub objectives, often in a preset sequence. There is evidence that if team

members work cooperatively and accomplish their short-term goals, the project will manage

to met its long-term goals. The project life cycle serves as a readily available way of

breaking a project up into component parts, each of which has a unique, identifiable output.

The phase-gate system is not meant to be a substitute for the standard time, cost, and

performance controls usually used for project management. They are intended to create a

rigorous set of standards against which to measure project progress. Their primary purpose

is to keep senior management and stakeholders informed about the current state of the

project.

Project milestones do not occur at neat, periodic intervals; thus, controls should be linked to

the actual plans and to the occurrence of real events, not simply to the calendar.

Gate Reviews

Rather than waiting until the project is completed, the phase-gate process controls the

project at various points throughout its life cycle to make sure it remains on course and of

value to the organisation. Each phase-gate review assesses that the project is worthy of

continuation and that the risks are manageable. It approves the expenditure of resources to

continue with the project. The term “gate” implies that the project must go through this step-

in order to continue.

Ideally the team that conducts these reviews should stay constant to bring consistency to the

review process and to maintain a comparative perspective. The phase-gate reviews should

have well-defined entry criteria, review objective and agenda for each review.

When projects start with an ill-defined process or lack any type of phase-gate reviews, "hard"

gates are usually established. This means that the review must be successfully conducted

before the project can proceed to the next stage. When a well-disciplined development

process is in place and project staff are used to gate reviews, the organisation is positioned

to move to "soft" gates. Soft phase-gate reviews allow the project to proceed in parallel with

conducting the review, thereby reducing delays. In other words, there are no "hard" stops

while the team prepares for and conducts the review. Figure 50 below shows a typical

phase-gate review process, each gate can be successfully passed (g0), the project will fail to

pass the gate and be terminated (kill) or the project may need to rework the previous stage

and then attempt to pass through the gate again (yellow).



FIGURE 18 GATE REVIEWS

Design Reviews

Design reviews are a means to reduce project risks and increase project success. They

should be conducted with a spirit of cooperation. Design reviews are conducted with a

design review team composed of experienced, senior-level personnel who understand the

technology involved in the product or system and its associated technical risks. These

personnel should not be directly involved in the project in order to provide an objective

perspective on the design. Design review team members are chosen to match their skills

and expertise to the requirements of the project. The team is multi-functional to address all

the subject matter and issues covered during the review. The team may stay in place for the

project or new personnel may be added and existing design review team members dropped

as the project evolves in its development cycle.

Design reviews, while technically focused, are not limited to just the design of the product.

They must address all the life cycle requirements of the product as well as the project

requirements such as cost, schedule and risk. A design review agenda should be

established to cover all relevant topics and to guide the review. In addition to an agenda, it is

useful to define which process outputs are needed to support the design review or should be

inspected in preparation for the design review.

Integrated Change Control

In project management, integrated change control is a way to manage the

changes incurred during a project. Integrated change control is the described

method that manages reviewing the suggestions for changes and utilising the

tools and techniques to evaluate whether the change should be approved or

rejected

Rare is the project that does not undergo any changes at all during its full cycle. Projects

deal with change, and they are the subject of frequent change. Change in a project is not

bad, but uncontrolled and undocumented change can bring serious consequences to a

project including termination. Change control does not mean that there cannot be any

change, but that change must be regulated with a process to ensure that only those changes

that will benefit the project’s objective are approved. The project sponsor and any other

stakeholder in the project must decide whether the changes are worth the additional effort

and cost. They must also decide if the changes are acceptable in light of what effect they

might have on the rest of the project.

A change control process documents all requested changes so that the project team can

determine what effect the changes will have in terms of effort and cost. Once the estimates



are complete, the stakeholders can accept or reject the change. The key for the project

manager is to have the authority to refuse any change if the stakeholder and/or project

sponsor decline to sign off on the effects of the change on the project whether that be cost,

resources or delivery date.

FIGURE 19 CHANGE CONTROL PROCESS

Control of Change and Scope Creep

The original plans for projects are almost certain to be changed before projects are

completed. As a general principle change is normally from three basic causes: (1)

uncertainty about the technology on which the work of the project or its output is based; (2)

an increase in the knowledge base or sophistication of the client/user leading to scope

creep; and (3) a modification of the rules applying to the process of carrying out the project

or to its output.

The most common changes, however, are due to the natural tendency of the client and

project team members to try and improve the product or service. New demands and

performance requirements become apparent to the client which were not realised at the time

of project initiation. New technologies become available or better ideas occur to the team as

work progresses. The later these changes are made in the project, the more difficult and

costly they are to complete.

Without control, a continuing accumulation of little changes can have a major

negative impact on the project’s schedule and cost

As change in a project is inevitable the project manager must control the process by which

change is introduced and accomplished. Control of change is accomplished with a formal

change control system. The purpose of the formal change control system is to:



▪ review all requested changes to the project (both content and procedures);

▪ identify all task impacts;

▪ translate these impacts into project performance, cost, and schedule;

▪ evaluate the benefits and costs of the requested changes;

▪ identify alternative changes that might accomplish the same ends;

▪ accept or reject the requested changes;

▪ communicate the changes to all concerned parties;

▪ ensure that the changes are implemented properly; and

▪ prepare monthly reports that summarises all changes to date and their project

impacts.

FIGURE 20 CHANGE CONTROL

Change Control System

A formal, documented process that describes when and how official project documents and

work may be changed is required. A change control system describes who is authorised to

make changes and how to make them. While different organisations will have their own

procedures, it is recommended all of the following be present.

5. All project contracts must include a description of how requests for a change in the project’s plan, budget, schedule, and/or deliverables will be introduced and processed

6. Once a project is approved, any change in the project will be in the form of a change order that will include a description of the agreed-upon change together with any changes in the plan, budget, schedule, and/or deliverables that result from the change. For any minor changes, a risk identification and analysis study should be performed.

7. Changes must be approved, in writing, by the key stakeholder(s) as well as the project sponsor.

8. The project manager must be consulted on all desired changes prior to the preparation and approval of the change order. The project manager’s approval, however, is not required.



9. Once the change order has been completed and approved, the project plan should be amended to reflect the change, and the change order becomes a part of the new baseline.

FIGURE 21 CHANGE CONTROL SYSTEM

For large projects a change control board may be established comprising a group

representing all interested parties that processes all requests for change. For small to

medium sized projects the process for handling change need not be as complex. The main

source of trouble is too many project managers, in an attempt to avoid excessive

bureaucracy, adopt an informal process of handling requests for change. Misunderstanding

and a lack of consistency in the decision-making process arises from this informality, and

often the project manager finds the project committed to deliver a changed output of

extended scope with no change to the project budget and schedule.



Project Closure and Audit



Project closure is the formal ‘ending’ or termination of a project. Usually it will

occur once all the work of the project is finished; all of the outputs have been

delivered and accepted by the relevant stakeholders.

Every project will eventually come to an end. The steps involved in closing a project should

be planned and documented at the beginning of the project. It is important to ensure that all

project activities are satisfactorily completed. As the end of the project approaches the end it

is easy for the project manager, project team and key stakeholders to appear to lose

interest.

As the project draws to a close a phenomenon known as project drift begins to appear.

Customers or any stakeholders ask for a few last-minute add-ons. At this stage it is

important that the project manager keeps control of the process. These little extras are not

budgeted for and can add considerable costs to the project and seriously affect the

schedule. Any significant changes at this stage are best treated as a follow-on project after

closing the current project.

Conditions for Project Closure

Normal

The most common circumstance for project closure is simply a completed project. This is

often characterised by the transfer of ownership to the customer and/or support area of the

organisation (this will depend on the type of project and the final deliverables). For

development projects, the end involves the handing over of the final design and for internal

projects such as system upgrades the end occurs when the output is incorporated into

ongoing operations.

Premature

Some projects may be completed early with some parts of the project being eliminated. In

these instances, the implications and risks associated with this decision should be carefully

reviewed and assessed by senior management and stakeholders. If early project closure

occurs it should have the support of all project stakeholders.

Perpetual

These are the projects that never seem to end. Often these projects are plagued with delays

although they are viewed as desirable when they are finally completed. The major

characteristic of this kind of project is constant “add-ons”. That is stakeholders and senior

management continuously require and support more small changes that will improve the

project outcome. These changes typically represent “extras” perceived as being part of the

original project intent. This can be extremely common in software development projects.

At some point the project manager needs to call the project design locked to bring closure.

They can redefine the project end or scope so that closure is forced. They can limit budget

or resources. They can set a time limit. All alternatives should be designed to bring the



project to an end as quickly as possible to limit additional costs and still gain the positive

benefits of a completed project.

Failed Project

There will be circumstances where projects will fail. It may be the technology is too

immature, a prototype may be unworkable, or a decision made by government (such as the

South Australian Government’s decision to scrap a plan to build new prisons near Murray

Bridge) or construction projects caught in the global financial crisis.

Changed Priority

Projects may have their priority changed due to major shifts in the organisation. A project

may start with a high priority but see its rank erode or crash during its project life cycle as

conditions change. For example, some projects within the Department of Environment,

Water, Heritage and Arts would have dropped in priority when the government introduced

the water for the future program and associated projects.

In other cases, the original importance of the project can be misjudged; in some the needs

have changed. In some situations, implementation of the project is impractical or impossible.

If the project is no longer contributing to the organisation’s strategy, then the project needs to

be terminated. In many termination situations, these projects are integrated into related

projects or routine daily operations.

Project Closure Process

As the project nears the end of its life cycle, people and equipment are directed to other

activities or projects. Carefully managing the closure phase is as important as any other

phase of the project. The major challenges for the project manager and team members are

over. Closure itself becomes difficult because:

▪ The project manager is seeking to wrap up the project and finish;

▪ In very cohesive teams, members may unconsciously slow their work to put off

having to leave the team – or, if over-endowed with conscience, may seek a level of

quality in their products that is unattainable in the time left to them;

▪ Functional managers may seek to pull team members off the project so that they can

be reassigned; and

▪ Conflicts within the team, or the simple desire to avoid uncertainty as to their future,

may lead to members’ moving out of the project before completion of all work.

The outcomes of this can be that projects drift on endlessly with diminishing (or sometimes

no) resources, or that the final closure never quite occurs (with loose ends such as financial

accounts left in limbo).

The major activities to close a project are to develop a plan, staffing, communicating the plan

and implementing the plan. The typical close-out plan includes answers to questions similar

to these:



▪ What tasks are required to close the project?

▪ Who will be responsible for these tasks?

▪ When will closure begin and end?

▪ How will the project be delivered?

Communicating the closure plan early allows the project team to accept the psychological

fact that the project will end and prepare them to move on. The project manager’s challenge

is to keep them, and the team, focused on the project activities and delivery to the customer

until the project is complete.

Implementing the closure plan includes several wrap-up activities. Many organisations have

developed a checklist for projects to ensure nothing is overlooked. Implementing closedown

includes the following activities:

1. Getting delivery acceptance from the customer;

2. Completing all contractual commitment to contractors and suppliers;

3. Shutting down resources and releasing to new users;

4. Reassigning project team members;

5. Closing accounts and ensuring all invoices are paid;

6. Updating the project files and documentation; and

7. Evaluation.

Completion Criteria

Both the customer/key stakeholders and the project sponsor should have an understanding

with the project manager on what conditions need to be satisfied to warrant project

completion. Specific criteria should be developed and agreed to signify completion. Project

completion could be signified by the fact that:

▪ All tasks are finished;

▪ Specific deliverables are finished;

▪ Testing programmes are finished;

▪ Training programmes are prepared and/or finished;

▪ Equipment is installed and operating;

▪ Documentation manuals are finished;

▪ Process procedures are finished and tested; and

▪ Staff training is finished.

All criteria for completion must be measured by agreed methods or conflict will be inevitable.

The completion criteria can form the basis of a closure checklist to assist the project

manager and project team to ensure all required tasks are completed (an example is

provided at the end of this chapter).



Acceptance Process

The acceptance process is based on the closure checklist, and should be agreed with the

customer, project sponsor and key stakeholders. This checklist includes activities that must

be finished before acceptance is confirmed. The list includes question on various topics,

depending on the type of project. Some examples are:

▪ Project tasks – based on the WBS;

▪ Deliverables achieved;

▪ Quality standards attained;

▪ Supply and installation of equipment;

▪ Testing and validation of equipment; and

▪ Training of staff.

The acceptance process should also identify who in the organisation has the authority to

sign the project completion certificate.

In addition, the following points need to be considered and confirmed:

▪ Who is responsible for each step of the acceptance process and the work involved?

▪ What post-project support is required and who is responsible?

▪ What post-project support can be available?

▪ For how long such support must be given?

Close-Out Meeting

Prior to the close-out meeting the project manager must review the project to ensure that all

work is going to finish on schedule and no forgotten tasks are expected. The project

manager must set clear targets for the project team to complete all tasks so as to avoid

giving the customer an excuse to withhold acceptance. Once the dates are either achieved

or will be achieved the project manager should propose a date for the close-out meeting.

The key participants are the customer, the project sponsor, key stakeholders and the core

members of the project team. The key objective is to get agreement from the sponsor to

formally close the project.

The key issues to be covered in the meeting include:

▪ Review the project results achieved;

▪ Receive feedback from everyone involved;

▪ Confirm completed actions (though closure checklist);

▪ Confirm any actions for outstanding issues;

▪ Agree and confirm responsibilities for any ongoing work or support;

▪ Provide completion certificate for approval and sign-off by project sponsor; and

▪ Thank all the participants for their support and commitment.



One of the most significant reasons for the close-out meeting is to forbid further

unauthorised expenditure against the project.

Project Evaluation

Evaluation is the process used to review the project and identify what went well and what

can be improved. As discussed earlier it can be difficult to complete as most project team

members are either transferred or looking forward to their next project. Both motivation and

enthusiasm have dropped to a low level. Often people do not want to be reminded of what

went badly during the project, viewing the events as ancient history.

Lessons Learned

Every project whether successful or not, will generate lessons learned. A lesson learned is

some practical wisdom, insight, learning opportunity or valuable lesson that has been

observed during the life of the project. Most importantly lessons learned most focus on

successes and achievements as well as mistakes and failures. By focusing on the negatives

there is a greater risk of magnifying the negative results and minimising the positives. By

failing to recognise and reward the positive results, future project managers gain no insight

on aspects of the project that worked well. Over time because the positive in not rewarded it

might not be repeated.

Documenting the lessons learned and sharing them with others can be quite challenging.

Selecting the best option to present the lessons learned can be done in a number of ways,

including formal presentation, formal project report etc. Ultimately the information needs to

be disseminated effectively with a clear opportunity for future projects to learn from past

ones.

We learn from experience only if the experience is preserved and studied

(Whitten, 1999)

The Final Report

Good project management systems have a memory. The embodiment of this memory is the

final report. The final report is not another evaluation; rather, it is the history of the project.

The elements that should be covered in the final report are listed below. When considering

these elements, it is also beneficial to consider where the source materials can be found. For



the most part, the required information is contained in the project plan. In addition to the

project plan, all project audits (if they have occurred), project reports and evaluations also

contain required input. Almost everything else required by the final report is reflective based

on the thoughts of the project manager and others involved in the project. The format of the

final report will vary from organisation to organisation but as a minimum should include:

▪ Project Performance. A thorough review of what the project achieved compared

with what the project tried to achieve. This could include documenting:

- the project selection methods;

- the achievements (and failures) of the project;

- schedule comparisons against plan;

- the extent that risk (known and unknown) affected the project;

- magnitude and impact of variations;

- accuracy of forecasts and estimates;

- timeliness and appropriateness of the corrective action taken;

- the lessons learned; and

- recommendations for future projects.

▪ Administrative Performance. A review of the administrative practices that helped or

hindered the project. This could include documenting:

- management access, viability and support;

- currency of information supplied;

- backup provided by ancillary staff;

- policies, procedures and structures;

- the lessons learned;

- legal compliance and contract management;

- financial management; and


▪ Organisational Structure. A review of how the parent organisation structure aided

or impeded the progress of the project. This could include documenting:

- the sense of synergy between the project and the project organisation;

- the use of the right organisational structure to manage the project;


- team selection techniques;

- the management and subordinate issues arising from blending operational work

with project work;

- the working relationships between all the stakeholders;

- the risk profile of the project parent;

- the resourcing commitments given and received; and




▪ Project Teams. A review that provides an opportunity to profile the performance of

team members. This could include documenting:

- the declines and/or improvements in performance;

- motivation and morale issues;

- the team dynamics, cohesion and productivity;

- leadership potential;


- opportunities for additional training;

- the ability to take on more complex projects; and


▪ Project Management Techniques A review of the project management approach

adopted throughout the project. This could include documenting:

- the appropriateness of the methodology in managing changing expectations;

- the inclusion of relevant stakeholders in decision making;


- the suitability and flexibility of the documentation used;

- stakeholder ‘buy-in’ to the methodology; and


For each element covered in the final report, recommendations for changing current practice

should be made and defended. Insofar as is possible, the implications of each potential

change should be noted. Equally important are comments and recommendations about

those aspects of the project that worked unusually well. The final report is an appropriate

repository for such knowledge. Once reported, they can be tested and, if generally useful,

can be added to the organisation’s list of approved project management methods.

Archiving

The final task is to archive all project files. The amount of work needed at the end of the

project to close down all the files and store the information safely will be indirectly

proportional to the care and attention given to files during the active life of the project.

Record keeping is important not only from a legislative perspective but also from a historical

perspective. The records will be a source of information for other project managers. To

ensure that the information is easily captured ensure that the information is not scattered

across the organisation and is difficult to find. This includes information on local hard drives,

email inboxes, shared drives etc. Only by archiving and giving everyone else access to

these records will the project learning be shared. It is therefore important that all records are

carefully indexed. Ensure that when performing an electronic keyword search that all records

are linked and can be easily found.



Celebrate

Recognition of the success of the project should be an integral part of closure. Include the

stakeholders, without whom you would have not been so successful. Ask the project sponsor

to give a short presentation to the group about how senior management feel about the

achievements, and acknowledge the contribution made by all present. If appropriate (or

allowed), even provide a free lunch.

Those who cannot remember the past are condemned to relive it

(George Santayana, 1863-1952)

Post Project Evaluation/Audit

At some stage after the project handover, the project’s benefits should be measured. When

this process is conducted the project is complete and the customer has accepted the results.

The benefits of the project are not all apparent. Early in the project the benefits would have

been defined along with some form of metric to validate the benefits. For example, if a cost

benefit was to be achieved the project would have identified the saving and the time frame in

which it would be achieved. At project closure it should be agreed who is responsible for the

measurement of benefits and when they are to be reviewed.

Audit

The project audit and report are instruments for supporting continuous improvement and

quality management. It is important to learn from past mistakes and capitalise on things that

worked well. Typically, about 90 percent of all projects are not seriously reviewed or audited.

This results in valuable lessons learned being forgotten and mistakes being repeated. Often

the projects that are audited are those that have been major failures or disasters. The

problem with this approach is the focus is on what not to do from the failures, not what to do.

By placing a balanced perspective on project audits, that is examining both success and

failures the organisation can incorporate better practices into the project management

system and methodology.

In any organisation that conducts projects it is prudent to have regular reviews on current

and recently completed projects and their role in the organisation’s future. The project audit

includes three major tasks:

▪ Evaluate if the project delivered the expected benefits to all stakeholders;

▪ Assess what was done wrong and what contributed to successes; and

▪ Identify changes to improve the delivery of future projects.

Project audits will use performance measures and forecast data. But project audits are more

inclusive. Project audits review why the project was selected. Project audits include a

reassessment of the project’s role in the organisation’s priorities. Project audits include a

check on the organisational culture to ensure it facilitates the type of project being

implemented. Project audits assess if the project team is functioning well and is

appropriately staffed. Audits of projects in process should include a check on external factors



that might change where the project is heading or its importance – for example, technology,

government regulations, policy changes. Project audits include a review of all factors

relevant to the project and to managing future projects.

Project audits can be performed while a project is in progress and after a project is

completed.

In Progress Project Audits

Project audits early in projects allow for corrective changes, if they are needed, on the

audited project or others in progress. In progress project audits concentrate on project

progress and performance and check if conditions have changed. In rare cases, the audit

report may recommend closure of a project that is in progress.

Post-Project Audits

These audits tend to include more detail and depth than in progress project audits. Project

audits of completed projects emphasise improving the management of future projects. These

audits are more long-term oriented. Post-project audits do check on project performance, but

the audit represents a broader view of the project role in the organisation; for example, were

the benefits claimed actually delivered?

The depth and detail of the project audit depend on many factors. Some of these include

project type, project risk, project size and project problems. Early in progress project audits

tend to be perfunctory unless serious problems or concerns are identified. Because in

progress project audits can be worrisome and destructive to the project team, care needs to

be taken to protect project team morale. The audit should be carried out quickly, and the

report should be as positive and constructive as possible. Post project audits are more

detailed and inclusive and contain more project team input.

M113 Armoured Personnel Carrier Upgrade Project

M113s are the only tracked vehicle in the Australian Defence Force’s (ADF’s)

fleet of armoured troop transports used for transporting and supporting infantry in

a battlefield. M113s first saw service with the ADF during the Vietnam War and

are undergoing a major upgrade to improve protection, lethality, mobility and

habitability. Upgraded M113s are to be the core component of the ADFs

capability.

The ANAO examined progress in delivering this project in July 2005 and

concluded that the initial minimum upgrade phase of the project suffered from

poor project management practices; ineffective project planning; inadequately

defined project objectives; and technical problems



Manage Project Governance



Project governance is the alignment of project objectives with the strategy of the

larger organisation by the project sponsor and project team. A projects

governance is defined by and is required to fit within the larger context of the

program or organisation sponsoring it but is separate from the organisational

governance.

Project governance is an oversight function that is aligned with the organisations governance

model and encompasses the project life cycle. Every project, no matter what size, will

require governance, as governance provides the project manager and the team with

structure, processes, decision-making models and tools for managing the project, while

supporting and controlling the delivery of outcomes. The structure of the governance on your

project must be decided before the start of the project, to ensure that it is included in the

planning as governance takes time and costs money.

What is Project Governance?

Project governance is the framework, which ensures that the project has been correctly

conceived and is being executed in accordance with best project management practice and

within the wider framework of the University's governance processes.

Four key principles for effective project governance:

1. Establish a single point of overall accountability.

2. Service delivery ownership determines project ownership.

3. Separate project decision making from stakeholder management.

4. Distinguish between project governance and organisational structures.

3Key Principles for effective project governance.

Effective project governance is about ensuring that projects deliver the value expected of

them. An appropriate governance framework helps save money by ensuring that all

expenditure is appropriate for the risks being tackled.

Project governance is not about micro-management, rather it is about setting the terms of

reference and operating framework, defining the boundaries and ensuring that planning and

execution are carried out in a way which ensures that the project delivers benefits. Project

governance decisions should reflect the strategic reasons for the original decisions to

approve, fund and resource projects. Project governance bodies and structures must

recognise and manage risk in a way that is most likely to achieve the project’s desired

outcomes, but which mitigates the impact of project failure where necessary.

3 Ross Garland, "Project Governance - a practical guide to effective project decision making"



Causes of governance problems

A key objective of governance is to make decisions efficiently, effectively and transparently.

If sound governance is not clearly established, the following results can occur:

▪ failure to communicate fully and appropriately on a timely basis;

▪ failure to specify or accept decision making authority and responsibilities;

▪ lack of project direction, weak leadership or lack of governance skills;

▪ non-alignment of key stakeholders;

▪ over emphasis on reporting that reduces meetings to status updates rather than

interactive decision making;

▪ confusing contract management and decision making;

▪ failure to sustain governance processes and practices through to delivery of benefits

to the organisation.

▪ poor project team cohesion or inappropriate probity practices leading to confusion,

team turn-over and low morale;

▪ poor previous experience of project governance, which means project managers do

not understand the role. This results in inadequate or inappropriate support for

effective project governance (e.g. lack of transparency, poor communication,

withholding of ‘bad news’); and

▪ imbalance in the focus on immediate project issues at the expensive of future

operational factors (for example value engineering decisions removing sustainability

measures which reduce project costs but increase future operational costs).

Risk management

Effective management of the government’s risk exposure is critical to financial sustainability

and an integral part of governance and sound management practice. The risk management

standard recommends organisations have a framework that integrates the process for

managing risk into the overall governance, strategy and planning, management, reporting

processes, policies, values and culture.

Project risk management is an important element feeding into the organisational risk

considerations. Good risk management practices:

▪ increase the likelihood of achieving objectives and delivering government’s desired

outcomes;

▪ encourage proactive management, governance and controls;

▪ increase ability to adequately identify opportunities and threats and treat risk;

▪ improve compliance with legal and regulatory requirements and enhance health and

safety performance;

▪ improve financial reporting and management;

▪ improved stakeholder confidence and trust;



▪ provide a reliable basis for planning, priority setting, decision making and use of

resources;

▪ improve loss prevention and incident management; and

▪ improve organisational learning and resilience.



Lead and Manage Team Effectiveness



Establish Team Performance Plan

A team’s performance as a group can sometimes depend on how well they perform on their

own and their understanding of their expectations to work effectively together. Throughout

the duration of a project or activity, each team member’s performance should be clearly

defined with the team member and then monitored to ensure they meet the expected quality

of their outputs.

By establishing a team performance plan for each team member will ensure the productivity

and efficiency of the workforce is structured, manageable, and controlled.

This section will address the following performance criteria:

▪ Consult team members to establish a common understanding of team purpose, roles,

responsibilities and accountabilities in accordance with organisational goals, plans

and objectives;

▪ Develop performance plans to establish expected outcomes, outputs, key

performance indicators (KPls) and goals for work team;

▪ Support team members in meeting expected performance outcomes; and

▪ Consult team members to establish a common understanding of team purpose, roles,

responsibilities and accountabilities in accordance with organisational goals, plans

and objectives.

Develop a common understanding

Consult with team members to establish a common understanding of team purpose, roles,

responsibilities and accountabilities in accordance with organisational goals, plans and

objectives.

A team can be defined as two or more people with a combination of skill, that are often

complimentary, necessary to complete an activity, job, or project who work together to

achieve a common goal. Effective teams are becoming an essential part of the success of

every project/activity which may lead to increased employee motivation and productivity

when every team member contributes towards the common goal of the project or activity.

Characteristics of effective teams

Not all teams can work together effectively. Some teams spend more time debating decision

than delivering outcomes, some work in teams where the work is not fairly shared amongst

team members, and some teams have people who lack the skillsets required to complete

their assigned tasks.

Effective teams rely on the synergy of all team members to work effectively together as a

group, with the right skillsets, the right motivation, and expectations clearly defined and

understood by all members of the team.

The key characteristics of an effective team may include:

▪ Clear purpose of the project / activity;



▪ The right person for the job;

▪ Sense of belonging;

▪ Open communication;

▪ Fairness in decision-making;

▪ Innovation and Creativity; and

▪ Accountability.

Clear purpose of the project/activity

Everyone within the team should have the same understanding of the purpose and objective

of the project/activity and what is expected of each team member to achieve their common

goal. Information and decisions should be made clear to the team at the beginning and

during the project/activity with the purpose understood by all team members.

Without knowing the project/activities’ objectives and the decisions that guide the

project/activities’ outcome, the team will not be able to see what their common goal is or how

they can achieve it. Information and decisions about the project/activity must be clearly

articulated to the group as a whole and should be reiterated throughout the project/activity to

consistently remind people of the objective.

The right person for the job

A team is generally made up of a group of people with specific skill sets to achieve the

project/activities’ outcomes. The type of skillsets required will depend on the outcome of the

project/activity, where each team member has a specific role in the project/activity with

specific responsibilities.

Roles and responsibilities of all team members should be documented, explained to the

particular person responsible for the role, and it should be agreed to by the person and their

supervisor on what their expectations are in the particular role. Consider creating a skills

matrix with the team to determine the education, skillsets, and experience of each team

member that can be matched up with project/activity roles and deliverables to find the right

person for each job. A skills matrix may also be used to determine gaps in the knowledge

and/or skillsets that are required to complete a task and/or activity. At the beginning of the

project/activity, by knowing in advance that there is insufficiently skilled people to undertake

the tasks, will help with sourcing the right person for the job without impacting on the

timeframe of the project/activity if the insufficiency is identified before work begins.

Sense of belonging

It is a human need to feel like you belong to or is accepted as part of a group or team, in the

same way that we all need food and shelter. People generally need to feel a sense of

purpose in life, especially when it comes to achieving a common goal, and a sense of

belonging within a team will create an inclusive environment for people to be expressive and

to boost motivation amongst team members.

An inclusive environment is an environment where there is no judgement, no negativity

amongst team members, and all team members are treated as equals. A simple act such as



a team building exercise, can help the team bond better and to feel that sense of belonging

amongst their peers.

Open communication

Communication is one of the most common issue in workplaces that can cost the project or

business productivity and money. Communication problems can stem from differences in

religious beliefs, age, cultural, language or gender.

Barriers in communication will become a problem when these differences are too far and

wide, such as language barriers, that may prevent effective communication to occur.

Misinterpretations and misunderstandings may cause more issues and will slow productivity

which in turns will cost the project or business money. Manage barriers to communication

with sensitivity and compassion and consider ways to minimise the impact of these barriers,

such as providing information that is written in plain English and without jargon or buzz

words.

Open and clear communication within a team refers to the openness of the lines of

communication to management and amongst a team member’s peers. It is about sharing

points of view without any judgement and it should encourage open and honest discussions.

Fairness in decision-making

Decisions made by the team should be made by consensus where team members work on

an equal playing field with no judgement of anyone on the basis of role or position within the

team. When consensus is not feasible, the team should decide on a fair decision-making

procedure that everyone agrees on.

For example, issues can be explored, and solutions can be agreed to by all team members

in a workshop. To make a decision on which solution the team should adopt, a fair system

can be simply to use a voting system for all team members to select which solution they feel

would be suitable. At all times, ensure the procedure is transparent and that everyone can

see what others have selected, without disclosing who selected what option to influence

other people’s votes.

Innovation and Creativity

An effective team values individualism and original thinking that produces new approaches

to organisational problems. People with diverse backgrounds and work experiences can

contribute new ideas or solutions that have worked in other organisations or in similar

situations in a previous team.

Where a person’s experience in another organisation or team was successful or

unsuccessful, it may help justify the feasibility of an approach to work or not work in the

current team and situation. Creativity in a team can help bring fresh ideas and approaches

that may not have been previous considered. Without stifling creativity, encourage team

members to freely discuss ideas and solutions with no judgement on silly or unsuitable

ideas, particularly during a brainstorming session. Senior team members should be

approachable and open communication to encourage innovation and creativity.



Encourage innovation and creativity in a fair and open manner to prevent discrimination,

such as an application that provide anonymous suggestions of ideas and feedback. This

method will not only encourage more honest suggestions and feedback, it can also be used

to protect team members from feeling threatened if they were to disclose honest feedback

on a matter of concern or their own personal opinion on a topic.

Accountability

As part of being in a team, all team members must be accountable for their actions to get the

work done on schedule and accountable as part of the team to meet the team’s goals, plans

and objectives. By understanding and committing to the responsibilities of a team member’s

role and the group’s rules and procedures will ensure consistency and reliable outcomes.

Accountability is not limited to the team and the activities undertaken by the team, it includes

everyone involved in the project/activity, within and outside of the team. In an organisation

where the hierarchy is high, accountability of the actions taken by a team may be directly the

responsibility of the person above that team or higher, such as the Executive Officer or

Director.

Roles and responsibilities

Each member within the team are likely to have a role with a set of responsibilities that they

are to undertake throughout their involvement in the team. A clearly defined role will help

place the person in the team and how they contribute towards the success of a project or

activity. It will allow a person to easily understand their expected duties, the standard of their

performance, and the extent of their responsibilities in that role.

Responsibilities of a role are generally written in a simple and easy to understand way that is

prescriptive on what is expected and how the person should conduct the activities to fulfil

their duties. Consider one-on-one discussions with each team members or as a group to

establish a common understanding of the team’s purpose and to discuss each role in the

team and their responsibilities. By including each team member in the construct of defining

the roles and responsibilities will strengthen their buy-in to those responsibilities, particularly

when their feedback is considered.

Develop performance plans

Develop performance plans to establish expected outcomes, outputs, key performance

indicators (KPIs) and goals for work team to understand the expected performance of the

project. To guarantee continuous quality performance of your team, regular monitoring and

assessing of each team member’s performance is essential to ensure that everyone

understands what is expected of them, the outputs that are required of them in their role

within the team, and the quality of the work expected in order to achieve the success in the

output.

By establishing team performance plans for your team, it will provide greater control over the

team’s performance. The development of a performance plan occurs at the beginning of the

performance cycle or on commencement of the project/activity to discuss and agree on:



▪ What is expected – the product output, project/activity deliverables and the outputs

expected of the team member, and key performance indicators (KPIs);

▪ How it should be achieved – the team member’s expected conduct and behaviour

within the team; and

▪ What is required to do the job – the required experience, knowledge and/or skills to

reliably complete tasks.

The performance plan should encourage ongoing discussions that shall include continuous

reviews and assessment of each team member’s performance. This ongoing discussion

should capture changes, updates and modifications during the project/activity, especially

when changes occur in the project and circumstances of individuals and/or the organisation

changes.

Discussions about a team member’s performance is generally between the team member

and their supervisor, and it should be meaningful and effective, with the outcomes, key

points and what has been agreed to recorded for reference during the performance cycle.

By recording this information, the team member can reassess their performance against a

previously agreed key points and outcomes to determine their conformance against pre-

determined KPIs.

The performance cycle consists of the three general stages:

▪ AGREE – discussions to set goals and expectations that is agreed to by both the

team member and the supervisor;

▪ REVIEW – monitoring and reviewing the progress; and

▪ ASSESS – discussions to assess the team member’s performance and to determine

if other goals are required to achieve the organisation / project’s / activity goals.

FIGURE 22 – PERFORMANCE CYCLE

AGREE

REVIEW

ASSESS



How to develop a performance plan?

A performance plan is a record of a team member’s performance planning discussion and

involves the key steps for both the team member and the supervisor to do in preparation for

the discussion:

1. Prepare for the discussion

a. Review documents that provides information about the team member’s role

and/or plans that relates to the project / activity or organisation such as team

business plan, strategic plans, and job descriptions;

b. Take notes on what you need and what you wish to discuss in the meeting,

including your career goals, what skills or training you may need to do the job,

and how you prefer to be managed and receive feedback; and

c. Arrange for a time and place that suits both people with little to no

interruptions and sufficient time to have a thorough discussion without time

constraints.

2. During the discussion

a. Confirm what has been agreed to, including any actions from the agreement

including who will do what and by when;

b. Discuss what will be recorded and how it will be recorded; and

c. Discuss issues honestly and respectfully to keep communication going, and

determine solutions that are future-focused, realistic, and with a reasonable

expectation of each other.

3. Following the discussion

a. Record the main points and what was agreed in the Performance Plan;

b. Implement what has been agreed, including any follow-up actions; and

c. Continue to have performance discussions on a regular basis to assess and

readjust goals as required.

Performance Management

Performance management is a strategic process that involves ongoing dialogues between

an employee and their supervisor to set achievable personal goals and to manage the

employee’s performance for achieving the organisation’s goals.

An effective performance management process will enable managers and supervisors to

evaluate and measure individual performance and to optimise productivity by:

▪ Aligning each team member’s daily actions against the strategic business objectives;

▪ Clarifying accountability related to performance expectations;



▪ Identifying necessary skill development and learning activities; and

▪ Documenting each team member’s performance to support career planning

decisions.

Performance management can be described broadly in three stages:

1. Goal setting;

2. Encouragement and motivation; and

3. Recognition and rewards.

Set effective goals

Effective goals must be clearly written and must also directly contribute to the achievement

of the team’s strategic direction. The team’s strategic direction will typically align upwards

with the organisation’s goals and downwards with each team member’s goals.

When setting goals, the key job expectations and responsibilities of each team member

should provide the focus of these goals and should address what is expected and how it will

be achieved. By using a measured approach such as the SMART goal framework it will

define goals that are specific, measurable, and time-bound to make tracking of progress and

monitoring easier.

FIGURE 23 – SMART GOALS

Encouragement and motivation

Encouragement and motivation are what progress relies on. Encouragement can either be

through recognition of improvements or from regular feedback on progress, which in turn will

provide motivation for a person to achieve higher or want to improve their progress.

Some people are able to encourage and motivate themselves, however the motivation and

encouragement from another person can be more effective when a person receives

confirmation that they are doing the job well or that they are on the right track. By opening

communication up and providing honest feedback on a person’s performance with positive

SpecificSMeasurableMAchievable / AttainableAResults-oriented / Realistic / RelevantRTime-boundT



and constructive advice on how to make improvements can significantly change a person’s

motivation and their satisfaction with their job.

Recognition and rewards

It is becoming more common that organisations are linking performance with rewards, and

only as a consequence of sound performance management processes. Recognition for a

job well done can be provided as formal recognition in the form of a certificate, informal

public recognition as a public announcement, or privately delivered feedback between a

team member and his supervisor in a one-on-one meeting.

Recognition and rewards practices can positively impact job satisfaction, employee

retention, and loyalty to an organisation or team. These practices may include:

▪ Delivery relevant feedback on performance on a regular basis;

▪ Setting and communicating clear performance expectations;

▪ Providing a clear link between performance and rewards;

▪ Identifying organisational career paths for employees, particularly where there are

promotional opportunities;

▪ Evaluating performance and delivering incentives in a fair and consistent manner;

▪ Providing appropriate learning and development opportunities; and

▪ Recognising and rewarding top performers.

Support team members to meet expected performance outcomes

Individual performance and the performance of an entire team are two separate ideals.

However, if one team member’s performance fails to meet expectations, the whole team’s

achievement and performance will also be dragged down.

The performance of both the team and each team member makes up the performance of the

project/activity. When the performance of either of the team or team member fails to meet

expectations, the other will suffer as a consequence and will disrupt the performance to

achieve the outcomes of the project/activity.

Be a leader

Every team member looks up to the team’s leader for direction and guidance. A leader has

the responsibility of ensuring that every team member understands the short and long term

goals of the team, and the pathway to fulfil the goals, the segments of a project/activity, the

deadlines the team must achieve, and the processes and procedures involved.

A leader should help empower each team member by giving them controlled discretion,

particularly when it comes to problem-solving and when formulating recommendations. By

opening up the thinking, it will give team members the freedom to wander within the

parameters of knowing how much detail to give and how much original thinking is expected

to possibly find better solutions than the ones originally suggested. Ask team members for



their input and ideas, such as “What are your thoughts?” or “How would you solve this

problem?” and get into the habit of soliciting ideas at all stages of a project/activity and be

attentive to their responses.

A good leader will also give credit where credit is due. Give credit and recognition to others

for their contributions on a regular basis rather than holding back until the end of

project/activity. Don’t risk team members seeing a leader exploit them for their own

recognition or that they are benefiting from their ideas. Acknowledge team members’

contributions openly within the team and openly to others within the team, especially in front

of other team members.

Supporting the team

Leading a team is more than just providing guidance on how to deliver on project/activity

deliverables or knowing how to manage you team, it is also about providing the team with

the support to do the work and managing their daily interactions within the team.

By making the necessary resources available to team members to allow them to complete

their tasks and do their work, it is an important aspect of leadership that is often forgotten

about. Critical information, tools, and equipment, including time and access to people are

necessary to support the team throughout the project/activity. There is nothing more

frustrating to people than being expected to complete work without the necessary

information, tools and resources to do so. Holding back information will not only affect the

performance of the team member, but it will impact on the performance of the team to deliver

the outcomes of the project/activity.

By simply ensuring your door is always open and just by being approachable to all team

members, it will open up communication to allow you to give information and receive

feedback more freely. Team members will feel more accepted as a part of the team when

they can discuss anything about the project/activity with you without fear of being judged or

discriminated based on their role. During and towards the completion of a project/activity,

consider scheduling time for the team to showcase their work at various stages of the

project/activity to give each team member a chance to demonstrate their aspect of the work

to the rest of the team. This will not only demonstrate to all team members the work that

each person is working on or has accomplished, it will also provide other team members with

the understanding of the work involved in completing the project/activity. It provides each

team member with the recognition for their achievements and contributions towards the

project/activity.

Meeting expected performance outcomes

Each team member should be made aware of their project/activity role and the

responsibilities associated with that role by the leader. This should include each person’s

expected performance and the outcomes expected of that person in the role.

To meet expected performance outcomes, key performance indicators or KPIs may be

considered throughout the life of the project/activity to identify all the key deliverables and to

evaluate their success at each milestone against the key business objective. Every team



member should contribute partly or wholly towards a particular deliverable expected at each

milestone and their efforts to achieve that deliverable and should be measurable against a

timeframe for that milestone. If the team member is able to complete a task within the

allocated timeframe for that task, then their performance will rate better than if the task takes

longer to complete than the nominated timeframe. With the use of technology, such as

Atlassian’s JIRA, performance can be easily tracked and reported on periodically to ensure

performance outcomes meets expected timeframes, and that all efforts are traced.

This provides greater visibility to the team when the overall project/activity is slipping to

make early adjustments to future tasks or other changes necessary to meet project/activity

deadlines.

Develop and facilitate team cohesion

Cohesion is about how individual team members work together and interact to promote a

sense of being “part of a team”. Team cohesion can be achieved through cooperation,

mutual respect, effective communication, and having responsibilities within the team to

achieve the outcomes expected of the team. Team cohesion determines how successful a

team is based on how effective team members can work together and it is what keeps the

members focused and determined to reach their common goals.

Develop strategies for teams

Strategies can be developed to ensure team members have input into planning, decision

making and operational aspects of team work. Depending on how the team operates and

the nature of the environment that the project/activity operates in, will depend on the

strategies that will work.

Team cohesion takes time and commitment to develop the key elements that promotes

cohesion, such as support, mutual respect and communication. Regular meetings and

ensuring attendance by all team members will provide the message that they care about the

team, the team’s success, and the other members of the team. Team meetings can be set

up to get all members of the team together in the one place to provide information and to

sort issues out quickly and collaboratively. It provides the opportunity for everyone to

provide their input into planning activities, to discuss and address issues appropriately to

prevent barriers to cohesion, and decisions can be made jointly and agreed to quickly.

Team meetings are also an effective way to build understanding on discussions held and

decisions made by executives or senior team members.

Discussions in a workshop or a meeting with all relevant stakeholders can be a quicker way

to resolve issues than through an exchange of emails or discussions with individuals

separately. Decisions that may impact on one or more areas of the business/project should

involve all parties in the conversation to not only inform everyone at the same time, but it can

help identify issues that may not have been previously considered.

Strategies on how and when team members can provide input throughout a project/activity

should take the following into consideration:



▪ Encourage the team to work together and to participate;

▪ Inform the team on decisions made or discussions held that impacts on the team

and/or project;

▪ Determine how the team shall communicate – e.g. minutes of meetings, emails,

workshops, and meetings;

▪ Handle feedback and debate fairly;

▪ Keep a written record of individual and group decisions;

▪ Be mindful of verbal and non-verbal communication; and

▪ Recognise and reward positive contributions to the group.

Consider creating an Ideas Register to track all ideas and any decisions made about the

project/activity, including details on how it can be implemented to benefit the project/activity

and the team.

Develop policies and procedures

Develop policies and procedures to ensure team members take responsibility for own work

and assist others to undertake required roles and responsibilities. Each team member’s role

and responsibilities should be described in detail about what is expected of a person in that

role. Where necessary, policies and/or procedures may be created to better govern how the

person should perform and the method in which they should undertake their daily activities.

Policies may include a set of rules and boundaries that governs how something should be

done to achieve the expected outcome, or it can be a role’s expected key performance to

ensure a person in that role will meet the expected quality of work within a pre-determine

timeframe.

Procedures will guide a person on how they can achieve the expected quality of work

through defined processes. These processes will provide a stepped approach to completing

a task or activity and is often repeatable to ensure the person in the role will achieve all

required activities relating to their responsibility.

By defining each person’s role, responsibilities, and the relevant policies and procedures in

written form, it provides a record of what is expected of a person in that role. Each person

within the team should have the details that relate to their role in the team and should be

discussed with them on a one-on-one basis with their supervisor. This will allow any

discussions and feedback to be captured, considered, and clarified to ensure the person fully

understand what is expected of them and the quality of work and performance that is

required to satisfy the project/activity or team’s expectation.

Consider asking each person to sign their detailed roles and responsibilities as a sign of

commitment that the person will make to contribute towards the project/activity or team.

Provide feedback to team members

Provide feedback to team members to encourage, value and reward individual and team

efforts and contributions. As a leader, being able to recognise team efforts and contributions



is crucial to the success of the project/activity. Where a contribution has made a significant

and positive impact on a project/activity or team, it should be rewarded and valued

appropriately to provide the recognition that the person deserves. This may be as simply as

announcing the team member’s achievement to the team in a staff meeting or via an email to

the team.

The most basic form of rewarding a person of their contribution is by constructive feedback

to the team member. Feedback provides not only confirmation that they have done the job

well or that the person has made a significant contribution towards the success of the

project/activity, but it also provides words of affirmation that motivates and encourages better

performance. A simple feedback like “job well done” can make a difference to a person and

their motivation to do well and to continuously improve to receive more words of affirmation.

To some people, feedback can act as a measure of how well they are tracking in their

performance. Negative feedback, when delivered constructively, can help people re-adjust

their performance to satisfy the expectation of the project/activity or team leader.

Constructive feedback is about providing information on how they should perform or what

the person should be doing to achieve the expected outcome, without judgements, criticism,

or other negative connotations. Refer the team member back to their role’s responsibilities

and any documented procedures to put the person back on track.

Develop processes to manage issues

By developing processes to ensure that issues, concerns and problems identified by team

members are recognised and addressed, it ensures all issues are controlled and managed

consistently for all team members.

A process is a stepped approach to completing a task or activity. A project/activity should be

well-defined to ensure the process is transparent to stakeholders on what will be done and

how it will be done to achieve an outcome. There are other activities that should also be

well-defined to provide transparency to all team members, particularly around how issues,

concerns and problems can be raised and how they will be addressed in the course of the

project/activity. These processes should capture information about the person who has

raised the issue or concern, the person or team involved in resolving the issue, and the

outcome of the issue after it has been rectified.

An Issues Register can be created for each project/activity that will capture issues identified

by team members at all stages of the project/activity and may including information such as:

▪ Date the issue was raised;

▪ Who raised the issue;

▪ What the issue relates to;

▪ Who and what the issue impacts on; and

▪ The mitigation or resolution that has been put in place to resolve the issue.

By capturing and documenting a process around the Issue Register will ensure issues raised

will be addressed and rectified appropriately.



Facilitate teamwork

The difference between an effective team and an ineffective team can sometimes be far and

wide, however understanding the common factors that can help promote effective teams can

help facilitate teamwork.

Encourage participation

Encourage team members and individuals to participate in and to take responsibility for team

activities, including communication processes. Clear and open communication is the basis

of effective teamwork. Everyone within the team should be on the same page with

information relating to the project/activity, such as the project/activities’ objectives, their

responsibilities within the team, and deadlines that everyone is expected to meet. This

cohesion is facilitated by effective communication.

Being able to communicate openly within the team to both your peers and superiors is not

only about being able to express your own opinions about a topic or your feelings towards

something, it is also about knowing how to relate to other people and being empathetic

about other people’s opinions and feelings. A leader should demonstrate and encourage

team members to participate and communicate through effective verbal and non-verbal

communication skills and through effective listening.

Effective communication

Effective verbal communication

Effective verbal communication is being able to communicate through words with the

appropriate tone and manner to suit the situation and to encourage listening.

Mumbling instructions or barking orders are examples of non-effective verbal communication

as the information may not be clear to suitably instruct team members on what is expected

of them or it may lead to negative attitudes in team members feeling unappreciated and

unmotivated. Being able to provide clear, concise information in a timely manner when it is

required, is important to the success of a project/activity and its team.

Non-verbal communication

Non-verbal communication may include body language, facial expressions, and hand

gestures. This type of communication may either be positive or negative, with both having

very different effects on people.

Negative non-verbal communication, such as frowns and angry stares, may cause

frustration, uneasiness and tension with other people. They are deemed less approachable

and unfriendly to be around in the workplace.

Positive non-verbal communication, such as a warm smile, good eye contact, and good use

of their hands to further explain complicated directions may provide a warmer and more

inviting approach to communication.



Either way, communication is a two-way interaction between people and it is not uncommon

for people to replicate behaviour as a response.

Effective listening

Hearing is not the same as listening. Hearing is being able to perceive sound by the ear

whereas listening is the ability for a person to hear attentively and process information

accordingly. Listening requires concentration for the brain to process the meaning of words

and sentences and requires a level of consciousness to perform whereas hearing is an

involuntary act that the brain only registers when the brain acknowledges sound through the

ear.

Effective listening is about being able to pay attention to what is being said and providing the

body language to show that you are actively listening. Body language is an important aspect

of listening and may be obvious to the person speaking if you are engaged in the

conversation or not based on how the other person holds themselves. People who are

engaged in a conversation will naturally lean towards the speaker and will maintain good eye

contact with the speaker to show their level of interest in the conversation, whereas a person

who is not engaged with the speaker in a conversation is likely to have their body turned

away from the speaker and will get distracted by everything around them.

Building rapport

Rapport is about getting on well with people by having something in common. It is an

understanding of each other’s feelings or ideas and can be an understanding between

people who share similar values, beliefs, knowledge or behaviours.

Building rapport can be achieved through matching language, body language, and tonality.

FIGURE 24 – COMMUNICATION CHANNELS

Rapport can be established by mirroring and matching another person. When people are

like each other, they generally will like each other! By establishing trust, you can build

rapport with ease when you create a safe and supportive environment that encourages

ongoing respect and trust.



When building rapport, it is important to:

▪ Be genuinely interested in the client;

▪ Listen without judgement or assumptions;

▪ Respect the client’s perceptions and their choices;

▪ Continually demonstrate personal integrity by:

- Maintaining your professionalism;

- Being alert to your client’s needs and meeting those needs with genuine care;

- Being on time and providing information in a timely manner;

- Not making personal attacking comments on anyone, including well-known figures;

- Being articulate and reframe from unnecessary profanity;

▪ Make clear commitments and follow through with them.

Primary Representational System

The Primary Representational System is a representational system of a person based on

their experiences and their view of the world. It is a sum of all the pictures, feelings, and

sounds that make up who we are, how we behave, and how we think.

Our sensory experiences are influenced by both internal and external factors that make up

our experiences and knowledge of the world:

▪ Internal influences:

- Pictures;

- Sounds;

- Self-talk; and

- Feelings.

▪ External influences:

- Seeing;

- Listening;

- Touching;

- Tasting; and

- Smelling.

Sensory Channels

There are four representational systems for each of our senses include:

▪ Visual;

▪ Auditory;

▪ Kinaesthetic (including Olfactory/Gustatory); and

▪ Auditory Digital.



Every person has a different model of the world and our experiences are a combination of

each of these four inputs and it is what helps us build our models of the word. Each person

will often have one or two preferred representational systems that are used most often,

particularly in times of pressure or stress. By understanding your own and other people’s

preferred system will help improve communication when communication is provided to them

in the most effective way that they received and process that information.

Visual

Visual people tend to register information more quickly when they are able

to see the information.

The Visual representational system consists of two types of “seeing”:

▪ Visual external (Ve) – seeing/observing something outside of the

person’s self; and

▪ Visual internal (Vi) – visualising something mentally from memory.

The sensory of sight involves a combination of pictures, colours, and shapes that may be

seen or observed. Other visual representations that are observed include:

▪ Dull/brightness

▪ Colour/black and white;

▪ Near/far;

▪ Clear/blurred;

▪ Associated/disassociated;

▪ Moving/still’

▪ Location of the image; and

▪ Size of the image.

Auditory

Auditory people tend to register information more rhythmically. They can

repeat instructions back with ease but can get easily distracted by noise.

The Auditory representational system consists of two types of “hearing”:

▪ Auditory external (Ae) – hearing sounds outside of the person’s self;

and

▪ Auditory internal (Ai) – recalling internal sounds.

The Auditory system is often a mixture of words and other sounds. Examples of auditory

representations include:

▪ Volume (loud/soft);

▪ Pitch (high/low);

▪ Tempo (fast/slow);

▪ Rhythm;



▪ Melody;

▪ Clear/muffled; and

▪ Who’s voice?

Kinaesthetic

Kinaesthetic people responds well to touch and physical rewards. They are

interested in how you feel and memorise by walking through the process or

by doing it. This representational system is made up on our internal and

external feelings of touch and body awareness, including our emotions, to

understand and process this information.

The Kinaesthetic representational system consists of two types of “feeling/touching”:

▪ Kinaesthetic external (Ke) – tactile sensation of touch or being touched; and

▪ Kinaesthetic internal (Ki) – remembered sensations and emotions associated with

being touched.

This representational system also includes two tuples of experiences that are often

associated with Kinaesthetic:

▪ Olfactory – associated with remembered and created smells; and

▪ Gustatory – associated with remembered and created tastes.

Example of kinaesthetic representations include:

▪ Hot/cold;

▪ Heavy/light;

▪ Rough/smooth;

▪ Strong/weak; and

▪ Good/bad tasting.

Auditory Digital

Auditory Digital, or AD, people will likely manifest characteristics of the other

three representational systems. They are logical people and also likes to see

the detail.

This representational system relates to self-talk and is not related to any

sensory organ. It consists of words and languages that are native to the person and relates

to analysis, understanding, experience, and consideration of a person that are not sensory

driven.

Example of Auditory Digital representations include:

▪ Perception/observation of self or others;

▪ Simple or complex situations;

▪ Constant or intermittent; and

▪ Does this make sense?



Encourage participation in team activities

An effective team is supported by effective leadership. Leaders can motivate and discipline

team members to ensure that everyone is performing to their highest potential while

providing inspiration and direction to the team. They should be able to encourage team

members to speak their mind during team meetings, and any issues can be shared with the

team to resolve collectively.

With the advancement of technology and fast-paced business environments, some team

members would never see one another face to face if they did not make a point to do so.

Some teams are geographically diverse and may be spread out across different floors of a

building, different buildings within a location, or across different states or countries. A team

that is not situated together may sometimes make teamwork difficult without having the team

develop their connections together through shared experiences and practices.

Team building exercises can help build effective teamwork and is an important factor to

determine the effectiveness of a team and their members earlier on in a project/activity.

Team building activities such as games and social activities can be used to improve

particular aspects of team performance such as communication, problem-solving or

creativity and it can be an effective way to bring people together to build relationships, boost

morale and promote mutual understanding of interests, personalities, strengths and

weaknesses.

Encourage team members to take responsibility

When team members have a sense of personal ownership in team activities and that they

believe their contributions are valued and contributes towards the project/activities’ goal,

they will feel more motivated to contribute their best work.

As a leader, there are many ways to encourage team members to take responsibilities for

team activities and outcomes. The most important one of all is to be a good example and

model the behaviours you expect from team members. By enthusiastically contribute to the

project/activity and keeping your attitude positive and your motivation high, team members

are more likely to look at you to set the tone for the entire project / activity. So as the

responsible person in the project/activity, it is essential to create a collaborative structure

and not a strict hierarchical model to allow everyone to feel like they are equal amongst their

peers.

Assign each team member with personal responsibilities for some aspect of the

project/activity based on their strengths and talents and give them a degree of authority over

their aspect of the project/activity to encourage ownership and personal responsibilities.

Team members are more likely to contribute more and work harder if they feel a sense of

ownership in its success or even failure. To motivate team members to see the

project/activity as their own, communicate openly and honestly so they understand the

project/activity the way you do without holding back information about difficulties or

complications. When problems or road blocks arise, call upon the team to help solve the

difficulty and give them the freedom to experiment with different solutions. So give them a



chance to use their talents and ideas and they will be motivated to make the project/activity a

success

Support the team to resolve work performance problems

Work performance problems can surface for a number of reasons. While some are caused

by poor management, majority of performance problems are caused by personal and

professional situations that may not always be obvious. In some cases, problem employees

either do not recognise the source of their problem or cannot see that there is a problem until

it is pointed out to them. A good manager must identify the source and type of performance

problem to know what and how to apply the proper treatment.

Identifying the cause of the problem is more difficult than finding the cure, and sometimes it

may take time to investigate the problem or gain the confidence of the person to open up

about their problems before you can help them. If the team member’s unsatisfactory

performance is caused by personal problems, the approach you should take should be more

delicate and will need you to work around sensitive areas to re-focus the troubled team

member on the task at hand.

Address the problem as soon as possible

When you have identified the cause of the problem, then action must be taken to address it

as soon as it arises or as soon as you are made aware of it. Procrastination or delay in your

action will make the employee think that under-performance is acceptable and the rest of the

team, if they are aware of the problem, may perceive that you simply don’t care or that the

level of performance is acceptable.

Be clear that concerns relate to the lack of performance

Be very clear that your concerns relate to the unsatisfactory behaviour, attitude, and/or

performance and not their personal shortcomings. The focus must be on the workplace and

not their personal issue, even if the under-performance is related to a personal issue. This

will help the team member focus on work and not on their personal issues. It will also make

correcting the behaviour or attitude problems easier when the under-performance can be

fixed outside of their personal issues. The key to remember is that you are not likely to be

able to help them fix their personal issues, but you can help them improve their work

performance even to keep their mind off their personal issues.

Be a role model for others

Ensure your own contribution to project/activity serves as a role model for others and

enhances the organisation’s image for all stakeholders. An effective team requires

contributions from each team member to create success. Contributions by each team

member should serve as a role model for others within the team on the expected quality of

work and expected outcome.



Achieve quality of work

It is important for leaders and managers to recognise quality work and reward team

members accordingly to demonstrate to the team of what is considered to be excellent work.

By showcasing how well someone can perform to the rest of the team will not only boost the

confidence of the well-performing team member, but it can increase motivation in other team

members to want to strive for the same recognition.

Not only should team members be learning from others in the project/activity, but they

should also be encouraged to strive higher and achieve more through education and

training. Team members should be encouraged to take training courses, attend workshops,

and other activities that will contribute towards building their own performance and to

continually learn more about their work and how to improve on their own performance.

Achieve the expected outcome

In order for quality to be achieved, everyone in the team has to work together towards the

project/activities’ common goals. Unity of the team is expected to provide mutual support

throughout the project/activity to achieve the best possible performance that may help

enhance the organisation’s image to both internal and external stakeholders.

As a manager of the team, your responsibility is to facilitate the team to complete the

project/activities’ purpose and goals and by supporting the team to achieve these goals.

Liaise with stakeholders

Establish and maintain open communication

Stakeholders are the people who may impact or be impacted by the success or failure of a

project/activity. They may have invested funds in the project/business or their perception

regarding the project/activity is important for the project/activity to succeed. Fostering a two-

way, inclusive dialogue with stakeholders is the key to successful communication between

the team and stakeholders of the project/activity.

By establishing open communication, it will not only build trust between stakeholders, but it

will allow information to be freely exchanged to establish good working relationships. In the

same way that teams can establish and build trust with each other to work better as a team,

establishing good communication with stakeholders can sometimes come with challenges

that differs from team members.

Identifying the target audience

Stakeholders may be internal to an organisation or external to an organisation, such as a

vendor. By knowing and understanding the relevant groups of stakeholders during the

planning stage of a project/activity can help identify who are involved in the project/activity,

where they are from, and what role they play in the project/activity.

Stakeholders shall be identified and prioritised in accordance to their vested interest in the

project/activity into categories:



▪ High influence, High interest;

▪ High influence, Low interest;

▪ Low influence, High interest; and

▪ Low influence, Low interest.

High influence, High Interest stakeholders

These stakeholders are highly interested in the outcome of the project/activity and they have

a great amount of influence that may impact on the success of the project/activity. These

stakeholders may be involved in another project/activity that are directly impacted by your

project/activity or the project/activity is within the scope of their project/activities’

deliverables.

This group of stakeholders should be engaged regularly and at a higher frequency to keep

them inform of the progress of the project/activity.

High influence, Low Interest stakeholders

These stakeholders are highly interested in the outcome of the project/activity but have very

little interest in the outcome of the project/activity as the it may have little direct impact on

their project/activity.

This group of stakeholders should be engaged periodically as required, providing the

outcomes do not produce complications for the project/activity.

Low influence, High Interest stakeholders

These stakeholders have little influence on the project/activity, however they are highly

interested in the outcome of the project/activity.

This group of stakeholders should be engaged periodically as required, as they can

recognise project/activity challenges and help prevent major issues from impacting on the

project/activity.

Low influence, Low Interest stakeholders

These stakeholders have little influence on the project/activity and have little interest in the

outcome of the project/activity. They are not concerned about the project/activity however

their engagement with the team may be required from time to time. Engage with this group

only when required.

Stakeholder analysis

Stakeholder analysis is an approach of identifying and understanding the actors involved in

the project/activity. As part of the analysis of stakeholders involved in a project, it is

essential to document a Stakeholder Communication Plan as an element of project/activity

management. This document will identify the stakeholders, their role in regard to the

project/activity, and the designed management and communication strategy intended to

communicate effectively with these stakeholders throughout the project/activity.



Stakeholder analysis identifies the appropriate individuals and groups of people and

determines their roles at specific and often critical stages of the project/activity. The

communication plan can determine the frequency of communication, the method of

communication for each stakeholder and who should be contacted about specific

information.

Formal methods of communicating

Formal communication methods are generally those that are either documented as meeting

minutes, have a scheduled time and date as to when the discussion is to happen, and with

specific groups of people invited to these discussions.

Meetings

This is one of the most common ways to communicate to a group of people. Discussions in

person by all stakeholders may provide the greatest benefit of receiving immediate

confirmation of decisions and clarification without any time delay to receive the information.

Someone from the project/activity team should chair the meeting to ensure discussions is

kept within the time period allocated for the meeting and that discussions do not stray from

the intended topic of discussion. As a general rule, minutes should be documented to

confirm the discussion that took place, any decisions made, and to identify any action items

for a specific person to take action outside of the meeting.

Conference calls

Conference calls are meetings held over telecommunication channels such as phone

conferences. This is particularly useful when stakeholders are not located within the same

location as the project/activity team and may help reduce cost of travel and time if

conversations are held by conference calls.

As a general rule, minutes should be documented to confirm the discussion that took place,

any decisions made, and to identify any action items for a specific person to take action

outside of the meeting.

Newsletters/emails

Newsletters and emails are for one-way communication with time delay on information sent

and received. However, the disadvantage of this type of communication is that it makes it

difficult to gauge if the reader has read and understood the content, particularly when tone of

the message is omitted from the communication. Immediate feedback from all stakeholders

is important to strengthen the message.

Informal methods of communicating

Informal communication methods are generally methods that are impromptu and occurs

without prior arrangements to set up. Conversations in the hallway, bathrooms and during

lunch may occur as casual conversations however they may sometimes be considered as

gossip. To effectively communicate informally, is to connect with people in a relaxed



environment and receiving feedback and ideas that would not be otherwise attained in a

more formal environment.

Communicate information from management to the team

Communication should generally flow from top to bottom in the hierarchical project/activity

and/or organisation structure. Strategic information should be filtered downwards to provide

the relevant information to those below the particular person in management. Information

should be relevant to people that it relates to.

Managers with responsibilities to a group of people, should be responsible for informing their

people about the information. In a project/activity team environment, the project/activity

manager is responsible for disseminating that information to the project/activity team and to

ensure that understand of the information is achieved. Ways to communicate information

from management to the team should be via a meeting with the team to allow two-way

conversations to occur and feedback and discussion with the group if required.

Communicate issues and follow up

In a project/activity environment where issues and concerns are raised by a member of the

team, information should be captured and communicated to the affected party either to

rectify or to action should be made immediately once the information comes to hand.

Documenting the information in a register can help track who raised the issue or concern,

who it relates to, who actions it, and the decisions made to correct or alleviate the issue.

Communicate with stakeholders in accordance with the stakeholder communication plan

document to ensure the proper channels are used for the particular stakeholder. Timely

communication is important to minimise concerns about any impacts to the project/activity,

or to the performance of a team member or the team.

Evaluate and take necessary corrective

When issues are pending action or are on-hold for an extended period of time, it may require

attention before the end of the project/activity, especially if it was raised by an internal or

external stakeholder. Issues raised by stakeholders must be treated in the same manner as

issues raised by the project/activity team. Each issue must be analysed, categorised, and

mitigated according to the issue or concern raised. Any workarounds or mitigation should be

documented and communicated to these stakeholders in the methods appropriate to that

particular stakeholder in accordance with the stakeholder communications plan.

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