Project documentation, roles, and responsibilities
A project can be defined as a sequence of inter-related tasks that must be completed to deliver pre-determined outcomes. Projects usually include constraints and risks regarding cost, schedule or performance outcome.
Accounting professionals could participate in a variety of project roles, from being a project sponsor at a strategic level, to managing a project from start to finish, and providing specialist costing and financing advice on an ad hoc basis for a series of projects across the organisation. Therefore, it is important that accounting professionals understand how a project is initiated, how it should be managed and the responsibilities of various project personnel.
This article will look at the documents that are usually prepared as part of project initiation (a business case and a project initiation document), and the roles and responsibilities of key personnel involved in the project process.
The business case
A business case needs to be developed which provides justification for a project to go ahead. For the project to be successful, it is important that the preparation of the business case is as thorough as possible, and for the following elements to be considered:
a) Current situation – It is essential to evaluate the current situation which has led to the need for the project. Depending on the scope of the project, this may include both internal and external analysis, and clear identification of a problem which needs a solution requiring a project process. For example, a manufacturing organisation may have issues with the supply chain for a crucial component part of their product, which, unless resolved, will lead to an inability to meet demand and damage relations with a major client.
b) Options considered and chosen – This will detail the options which have been considered to address the problem identified and provide justification for the selected option. To continue our example, the manufacturing organisation may have considered strategic partnerships, using several different suppliers or an investment in an extension of its own manufacturing facilities to be able to produce this component in-house. The business case should justify the chosen option both by considering how it fits the current situation, but also the feasibility and acceptability of the chosen option.
c) Feasibility – The selected option must be feasible for the project to go ahead. Feasibility considers whether it is possible for the chosen project to be undertaken successfully. If, in our example, the manufacturing organisation decided to produce the component in-house, a high-level feasibility study would include analysis of whether there are physical and human resources (both in numbers and skill sets) available to undertake this project and incorporate it into business as usual on completion.
d) Acceptability – As well as considering the impact on stakeholders (e.g. the current workforce, the customers etc.), acceptability will also focus on the financial acceptability to the owners of the business, the shareholders. An investment appraisal would be undertaken, considering the high-level costs and benefits of the project. This will determine whether the project will generate a positive return. Generally, positive returns won’t begin to materialise until the project is completed and incorporated into the business, so it is important to gain as accurate a picture of these as possible in advance. In our example, the manufacturing organisation will incur costs to extend the manufacturing premises and to develop the new production line upfront but will only see the benefits once the production line is in use.
e) Project constraints – Projects are simultaneously subjected to the triple constraints of time, cost and scope. These constraints often appear to be conflicting, giving project managers the difficult task of prioritising constraints and making decisions regarding where to make cuts or changes to the project.
For example, consider a project to organise a major sporting event which cannot be delayed. This would be considered a time-critical project and may require more resources and go over budget if there is a danger of time slippage. Alternatively, the project scope may have to be reduced for the project to be completed on time.
Similarly, if a project is constrained by a hard budget and is cost-critical (e.g. a public sector project which is funded by a specific grant), it may be necessary to reduce the scope if costs are rising, or to restrict overtime payments or reduce human resources attached to the project, which in turn may lead to time delays.
Finally, in our original example of the manufacturing organisation that decided to deliver a new production line dedicated to the production of a component for a major customer, the quality of the component is the focus of the project. The manager of the project may have to determine how to deliver the required quality whilst still ensuring the project is cost-beneficial and delivered at a time satisfactory to the customer.
f) Risk assessment – This would be a high-level assessment at this stage, as the detailed project plan has not yet been created and so the detailed project risks cannot be determined. However, it is important to consider what could prevent the overall achievement of the project objectives.
A typical risk assessment will include the identification of risks, and the evaluation of these, taking into consideration the potential impact and likelihood of each risk occurring. When discussing potential impact, the effect on the time, cost, and scope/quality constraints would be considered. Consideration of these constraints would help to understand the priority of each identified risk and determine appropriate mitigation.
Detailed risk analysis and mitigation plans would be completed during the planning phase, should the project be approved to go ahead.
Once the business case activities have been carried out and the documentation produced, this will then be presented to those managers involved in deciding whether the project should go ahead. This decision-making body would include the project sponsor, whose role will be discussed later in this article. The desired outcome is to obtain approval for the project to go ahead. Once this has happened, the initial Project Initiation Document can be prepared, and a project team assembled.
Project initiation document
The Project Initiation Document (PID) forms an effective contract between the project team and the sponsor for the execution of the project. Although it is likely to be revised during the planning phase of the project, and possibly even the later phases (due to unforeseen issues), the initial document will need to be in place in order for the project manager to understand what is required of them.
The PID would include the project objectives and summarised information from the business case but would also contain additional details such as the deliverables from the project. The deliverables are all the outputs that the project is expected to deliver and are necessary for the project to achieve its objectives. In the example of the manufacturing organisation, this may include the extension to the factory and the equipment required for the new production line, but could also include necessary software upgrades, staff training, supplier communications and any documentation that is required to be delivered throughout the project.
These deliverables may be used to determine appropriate gateways within the project. Gateways are points at which the project cannot progress without a formal review and sign-off from the project sponsor and project board. So, in the manufacturing organisation’s project, one of the first gateways might be the point at which the architect’s plans for extension are produced. This would need sign off from the board before the building work begins.
The PID would also include details of the project chain of command and the responsibilities at each level, including those of the project team. This would include the proportion of time that team members are expected to devote to the project i.e. whether they will be working on it full time until completion, or will only be required for certain activities, or will be a member of the project team alongside their usual duties. Project responsibilities are further discussed later in this article.
Once the PID is completed and signed off, and the project manager and project team are appointed, the project can begin.
Project roles and responsibilities
Different organisations may organise project responsibility structures in different ways, but the below structure should exist as a minimum:
The role of the project board is to ensure the business case justifies their approval of the project and to ensure continued alignment to the corporate goals and objectives. The board will also sign the project off as it passes through major gateways. The board will be the top-level decision-making power for any decisions outside of the defined remit of the project manager or project sponsor.
The project sponsor is the senior-level supporter of the project, they provide the finance for the project and will champion it to the board and to the organisation. They will also be the one to negotiate the resources available to the project and possibly the initial setting of the constraints. The sponsor will be the next level down from the board in terms of decision-making, so they will be authorised to make some decisions on its behalf, to a specified limit, which would be outside the scope of the project manager’s authority. The sponsor should ensure that the project is on track, even though they won’t be involved in its day-to-day management. They will do this through regular monitoring meetings with the project manager, at which they may also provide guidance if they feel it is needed.
The project manager is responsible for managing the project and the project team. They will have overall responsibility for the project plans, allocating resources to activities, implementing the project by following the plans and for controlling each activity and group of activities to ensure successful delivery of the project outcomes. This will include monitoring the triple constraints by keeping a record of the budget, the actual times taken for each activity (the actual times can be recorded on a Gantt chart for comparison against planned times) and ensuring that the quality standards are adhered to and that the project does not go out of scope. They will carry out all the usual activities associated with leading a team and will ensure effective communication both within the team and with all other connected stakeholders, such as the project sponsor and those who will be affected by the project outcomes. They will also be responsible for adhering to the project change process and for managing any problems as they arise, as well as managing risks. They will have overall responsibility for the project administration, such as version control of documentation, although they may allocate some of these tasks to members of the project team.
Project team members are responsible for contributing to the project objectives and deliverables, performing specific assigned tasks to a specified standard and allocated time frame to ensure the project is a success
Although there are many alternative project management models and software packages available to support project managers, the success of the project will depend on the degree to which a project is justified and supported by a comprehensive business case and PID.
The personnel chosen to be the project sponsor and the project manager will have a huge impact on the success of the project, and therefore these decisions should be carefully considered before appointing project personnel.
Written by a member of the SBL examining team