6.0  Managing Small Projects - Five Critical Steps to Tech Success

Tired of being a hero? You know what we mean. Putting in long hours near a technology project deadline in order to complete it? Not having enough time or resources, and the deadline can’t slip. We’ve been involved in projects like this, and there’s a real adrenaline rush near the end. Often times, there are penalties, too. We’ve worked in companies that routinely “brought out the cots” or booked hotel rooms near the end of a systems project. People literally slept in or near the office during crunch time in order to complete a project. 

Then, the reward for pulling off the technical miracle is getting to pull off another one. “The reward for work is more work.” We’re not sure who said that, but it’s been one of our mantras our whole career. And, it doesn’t seem to be limited to large projects, either. People working on smaller projects suffer the same fate, only quieter. The toll is just as real. 

Before going further, let’s define technology. Our view is that project management processes can be applied to any industry and to produce any product. With technology, the “product” we refer to is typically software. It could also be hardware or engineering-type products, but our main experience is with software development, so that is what we’ll focus on here. 

The Cost of Failure

If your company is like most others, 72% of your technology projects will fail this year. Failure is usually defined by studies in project success as being late or behind schedule, over budget, or delivered with wrong or insufficient features. Is your organization willing to lose over $2 million this year due to failed projects?  That’s the average amount one study found that companies lose through not managing their projects effectively. Can you really afford that? 

It’s true that large project failures get most of the headlines, but projects of all sizes can and do fail. The net cost of small project failures would probably equal or exceed the waste of large ones if anyone bothered to measure them.

Getting Started

First, it helps to distinguish what constitutes a project, because not all work should be managed as projects. Unless the effort 1) needs stakeholder requirements, 2) involves something new or unique, or 3) has an element of risk, it may not need to be handled like a project. But, if any of these three are part of the picture, then you should manage it as a project. An example may help to clarify. 

We mishandled an endeavor partly because we didn’t recognize it as a project. A while back our Internet Service Provider (ISP) informed us they were canceling our service in a month because they were bankrupt. We went into major react mode.  We quickly tried to find a new ISP and didn’t plan enough. It had high risks for us, and was definitely something unique to handle; two out of the three guidelines for a project.

Because of the tight deadline, and lack of planning, we missed the main risk: the ISP terminated our service sooner than they “promised.” Ouch. We lost all of our emails over a weekend, and our web site was down, too. It was stressful, and costly, and the pain could have been lessened with some project planning and execution. 

Unfortunately, most project management methodologies and frameworks are typically designed for large projects. We’ve found through experience that trying to use these frameworks and methodologies for small projects doesn’t work. In fact, they can be counter-productive. What most small projects need is a simple methodology to help guide them, not waste time with process overkill. 

Managing Small Projects - 5 Steps

Once you’ve identified work that should be managed as a project, now it’s time to start planning and executing the project. Our method for managing small projects involves 5 basic steps. It’s derived from our own experience and based on the Project Management Institute’s Body of Knowledge (PMBOK®). The five steps are project:

1. Sanctioning
2. Scope Definition
3. Scheduling and Estimating
4. Status Reporting/Executing
5. Success – Closing the project

A. Sanctioning

To be successful, all projects need to be sponsored and supported. The project sponsor owns it, and must approve its deliverables. Without this formal sanctioning of a project, it may be doomed to failure. The #1 contributor to project success, according to a recent Standish Group Report, is executive support. User involvement, experienced project managers, clear business objectives, and minimized scope are close behind as factors of successful projects. 

Executive support for a project is documented through a project charter. A charter sanctions the project, and outlines what the sponsor expects the project to produce. It’s meant to be a business document, not a technical one, and is designed to be short. Ideally, the sponsor should create it, but minimally they should sign off on it.  

As frequent project sponsors ourselves, we have found that slowing down long enough to create a charter forces executives to think through the need and vision for a project. And, it often stops many a “good idea” from being delegated as a small project and forces the sponsor to justify the business need for the project. The graveyard of abandoned projects often comes from those good ideas that weren’t thought through well enough, and the instigator has gone on to the next “big idea.”  

B. Scope Definition

The next step in managing a small project, and a natural follow-on to sanctioning it, is defining the scope. The scope statement defines the project’s:

• business issues and their impact,
• objectives (what the project should accomplish for the business), and
• deliverables (including features in and out of scope).

In other words, it defines what is “in scope” for the project. The sponsor signs off on this document, too, and commits to it. Sponsors are responsible for and need to make the decisions about the extent of the project, while project managers are responsible for planning the project and reporting against the plan. It’s a distinction we as project managers have learned the hard way, because it’s easy for sponsors to abdicate and make project managers responsible for scope decisions, and then blame the project manager for expanding the scope and missing deadlines. 

Another way to think about the scope is to think about it as the project manager’s answer to the sponsor’s charter. The scope statement interprets the business need and how the project will solve it. If it’s done right, the sponsor can use it to verify if and how their vision will be carried out through the project. We use a simple template for the scope statement and combine it with the rest of the project plan for simplicity. 

C. Scheduling and Estimating

Before starting a project, you also need to estimate how long it will take to accomplish the project objectives. For small projects, we suggest taking each deliverable and breaking it down to determine the tasks needed to produce each one. The resulting list of tasks is called a Work Breakdown Structure (WBS). The WBS helps you plan all the necessary work, and only the necessary work needed to meet the project objectives. It’s an essential tool for any size project. Breaking projects into smaller tasks makes it easier to estimate the time needed to perform the work, and it can be rolled up into an overall project estimate. 

The project schedule guides the flow of work, to ensure things are done in the right order. Tasks for the schedule come from the WBS, and allow sequencing work so that:

• tasks will be done in the right sequence, reducing delays,
• tasks with no dependencies can be done in parallel with other project work, shortening the schedule, and
• the longest sequence of tasks (called the “critical path”) will dictate how long the project will take.

Tools like Microsoft Project® provide valuable assistance in estimating and scheduling projects and in calculating the critical path. For projects without many dependencies, simple tools like Microsoft Excel® and Word® do a decent job of recording a schedule.

D. Status Reporting/Executing

This step is finally where project work begins. By now you’ve scoped out the project, divided it into deliverables, broken it into tasks, and created a schedule. It’s time to work the plan.

On larger projects, experts say 90% of a project manager’s time is spent communicating. For smaller projects, especially when the project manager is doing some or all of the work, the communication time is obviously much less. But, it is essential to communicate project status as it is executing. We suggest weekly status reports to the sponsor, describing:

• what has been accomplished since the last report,
• how much time and money have been spent,
• variations from the budget or schedule, and
• any project issues that have arisen.

E. Success – Closing the project

As each deliverable from the scope statement gets completed, take the opportunity to celebrate success. Of course, the sponsor should approve each deliverable first. After all deliverables have been approved, the project can be closed out. This step is important because it gives you one last chance to celebrate, and feel good about what the project has accomplished. It’s a great morale boost that beats being rewarded by more work immediately!

As importantly, closing out a project is the time to do a “lessons learned” session with the project team. A lessons learned meeting recaps what went well on the project and what could be improved for the next one. Both are valuable for capturing knowledge acquired during the project, and can be built on in the future. The lessons learned can be listed on a close report, which is also useful for summarizing project time, cost, and variances from the budget and schedule.

Putting it All Together

At first, going through the steps feels a little awkward and unnatural. After one or two efforts, though, people usually start seeing the benefits and the awkwardness disappears. Then, a scary thing starts to happen. People hold off starting on work until they get a project charter. Or, team members look forward to lessons learned sessions and celebrating the end of a successful phase or project closeout. Then, you know you’re on your way to “tech success” and can stop playing that hero role so much. You get more sleep and get to see your family more that way, too.

7.0   Fixed versus Usage-Based Billing: Reasons to Keep it Simple

Making real cents with simplicity over delving too quickly into usage-based options 

By NetSudser Bruce Bahlmann, CEO for Birds-Eye Network Services (www.birds-eye.net). He may be reached at 651-398-4679 or info@birds-eye.net. 

Besides death and taxes, there are some other known facts in this universe when it comes to delivering modern day telecommunication services – like keeping your monthly service fees very simple. Simplicity is what drives innovation and what differentiates market leaders from wannabes. In this article we look at the “hype” surrounding usage-based pricing while we provide you with a bit of history along with a different perspective about why you should think twice before changing your existing fixed monthly fee pricing for these “next generation” usage-based alternatives. 

History of Usage-Base Pricing 

Ask anyone for examples of successful usage-based pricing models and their immediate responses will likely include telephone, electric, and cellular phone services. Interestingly enough, telephones didn’t start out as a usage-based service. Instead, telephone service was initially established using a fixed monthly fee in the early 1900s. Similar to modern day high-speed Internet services, at that time phone services were highly criticized as being “wasteful” and that it “favors large users” by “independent” investigations. One of the facts that these claims had going for them at that time was that the setup and tear down of each phone call was completely manual. Warehouses full of telephone operators were required to carryout telephone calls – thus one could consider this requirement of an army of telephone operators as a significant, but necessary, fixed cost of doing business. Since the rate of labor generally increases over time, one could say this was an increasingly important cost that telephone companies needed to account for and track. As time passed, the “wasteful” criticism eventually suck and most of the world’s phone companies moved to metered (or usage-based) billing.  

Like the phone company, electric companies faced similar challenges in distributing power to growing nations. While today’s power companies face increased competition in delivering power to homes and businesses, there are one or more significant, but necessary, fixed costs associated with that industry including fuel for the power generation plants. The presence of a significant, but necessary, fixed cost plays an important role in the pricing of a service – especially if this fixed cost seems to fluctuate or has a tendency to increase. Such costs are strong indicators for potentially successful usage-based pricing models. Beyond these unique cases such as generating electricity, few of these models actually exist because simplicity is what drives innovation, and innovation ultimately lowers, nullifies, or eliminates fixed costs. What is odd about usage-based billing is that even companies who must use this method to remain profitable find ways to offer simpler billing options to their customers. For example, most electric companies now offer budget plans that can average each customer’s yearly utility bills in an effort to offer services that more closely represent fixed monthly fees even though they still monitor and report each customer’s usage.  

Some people would argue that usage based billing is popular, widely accepted, and allows service providers to maximize profits. I would argue that normal people only pay these usage-based charges because they can’t do without the associated technology, so they “have to” pay for the convenience yet are “hungry” and “ripe” for fixed cost alternatives. Essentially, usage-based charges were put in place by service providers out of the fear of losing money in delivering newer services. Therefore to maximize profits when subscriber usage is unknown or directly linked to significant, but necessary, fixed costs these complicated service plans (including usage-based options) receive serious consideration. However, as has time passes, the costs to deliver these services significantly drops, initial capital investments are paid down, and the competition for these services increases, you begin to see service plans simplify. 

Today, you no longer pay for local phone calls and many new long distance carriers now provide an “all you can eat” service plan for a fixed monthly fee. Perhaps you thought the telephone companies were riding the high road to profits by exploiting their highly lucrative usage-based pricing plans. Guess what? Simplicity even prevails over technological innovations geared to maximize profits from telecommunications. Why? Because ultimately service providers need customers to survive so to cater to the masses, the service provided must be simple to use, simple to understand, and most importantly - simple for their users to justify the expense. In the case of the telephone industry, simplicity (or fixed monthly fee) is the phoenix that has overcome previous termination and is on target to once again dominate the marketplace. 

I anticipate that within the next few years, even cellular services will abandon usage-based service plans. Why would cellular give up this gem? The answer lies in the hidden costs of supporting usage-based billing options as well as the unintended consequence that usage-based billing options have on customer usage of the technology.

Misconceptions Regarding Usage 

There is nothing but complexity associated with usage-based pricing. From the technology it takes to accurately collect and store it to the systems required to properly calculate and bill for it, usage based billing is a drain on the economics of service delivery. Take Cinglar’s new plan that allows you to carry forward paid for but unused minutes from month to month. This is a very innovative feature for them, but it has to be a nightmare for the billing department – not to mention the financial health of the company. If monthly revenues rise and fall based on customer usage, Cingular’s competition has got to be licking their chops. 

Another problem associated with usage-based billing is that discourages use. In studies where similar groups with usage-based billing were compared with flat rate billing the usage based groups maintained relatively flat usage growth. Perhaps early phone companies were motivated to implement usage-based billing out of the necessity to limit usage during a time when their capacity to handle calls was limited by the human capacity to manually make the connections. Fixed monthly billing however has shown to stimulated growth in usage in addition to growth of new subscribers. In fact, services that have migrated over to fixed monthly billing from usage-based billing have seen their service usage triple. Clearly, customers prefer to deal with known quantities when paying for telecommunications services. The more variables within a plan, the more complex it is, and ultimately the less popular it is among its customers. 

Interestingly, for any telecommunications service ‘usage’ is something that should be revered, not controlled or exploited. I feel telecommunications companies seeking to move to usage-based billing options are really not paying much attention to history. Clearly, usage-based models will maximize revenues only at what costs? Service providers moving to usage-based service plans open their doors for unnecessary competition that can place their core customers at risk. I believe the true cost of usage-based plans is that it discourages the very behavior that all telecommunications companies want to encourage and cannot survive without - USAGE. Usage is what justifies businesses and creates opportunities for businesses to diversify. I perceive telecommunications companies seeking usage-based options are only seeking near term profits – not long-term growth. For those of you who stand by your fixed monthly fees, remember this – history is on your side. 

8.0   The Coming Search Wars

* Link to Article (need to be registered with NY Times Site):  http://www.nytimes.com/2004/02/01/business/yourmoney/01goog.html

"The system that has the most users benefits the most," said Nancy Blachman, a computer scientist and author of an independent guide to using Google (www.googleguide.com). "Microsoft faces a tremendous challenge because Google fine-tunes its system by watching how users adjust their queries."

9.0  Guest Writers for This Report

I have opened up the Monthly NetSuds Report to guest writers. If you have a passion for a topic, and you can write (at least no worse than me), send an email to me matt@netsuds.com.  You can even send copies of your work.  It needs to be on "com and .com" topics and can include entrepreneur/investor activities.  Good information from our    service providers and vendors is also welcome so long as it is not a "commercial" for any one company or individual.

We will consider both sponsored and unsponsored columnists and guest writers.

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Please send your comments and feedback regarding this issue of the NetSuds Report to matt@netsuds.com.

Matt Noah

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