Chapter 9: (Web hosting control panel) Building Your Project Budget 201 Knowing
Chapter 9: Building Your Project Budget 201 Knowing the actual cost of scope changes Meet Marti. She s a software project manager for a financial advisement firm. She s managing a project to create a software program that will enable the financial advisers within her com- pany to track clients activities, portfolios, con- tact information, and communications. The software will interact with databases and inter- nal and external Web servers, and provide real- time secure transactions with commodities, stocks, and bonds. Marti and the experts on her project team have been working closely with Thomas Lippy, the chief operating officer and main stakeholder, to develop the project requirements. Thomas has signed off on the requirements document and is eager for Marti to get to work on the project. He believes that the software will help their com- pany grow by 15 percent each year. The rough order of magnitude estimate for the project was $750,000, +75 percent to 25 per- cent. The moment the WBS was created, Marti provided a definitive estimate of $1.5 million, +10 percent to 5 percent. Thomas approved the definitive estimate, and the team went to work creating the software. At each milestone within the project, Thomas was given the opportunity to review the pro- ject s work and to inspect the timeline and the budget. This also provided Thomas an opportu- nity to tinker with the project requirements. At each milestone review, Thomas added more deliverables to the project scope. Over the course of the project, Thomas added the fol- lowing requirements to the project deliverable: Field changes to the financial adviser s input screen Interaction with the company s IP-based telephone system for customer lookup Incorporation of a client Web site for cus- tomers to securely access their portfolios Integration with legacy databases for trend analysis Multiple views, searches, and tools for cus- tomers and financial advisers to access data These changes increased the project scope, which, in turn, increased the project costs by $450,000. Remember the Iron Triangle? You can t increase the project scope without affect- ing either budget or schedule (or both). When Marti discussed the changes and their impact with Thomas, Thomas was unhappy that these changes could nearly double the original pro- ject budget. Marti explained that there are sev- eral factors that affect project costs: The time to research each change takes time away from doing the project work. Someone has to pay for the developers time to do the research. Some changes require that progress be reversed in order to incorporate the new changes. Some of the requested changes would add time to the system testing phase of the project. Many of the changes required modifica- tions to the training documentation. The legacy database change required Marti to hire a contractor because the project team did not have the skill set to configure the middleware to interact with the software. The project team had to expand to include a network engineer to configure the IP-based telephones to interact with the software the team was designing. (continued)
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