The Importance of Good Project Definition
Why do projects fail? That’s a bit like asking “how long is a piece of string?” Different projects fail for different reasons, but one significant reason is poor planning and project definition. PMI’s “2017 Pulse of the Profession” survey found that 37% of projects failed because of “a lack of clearly defined objectives and milestones to measure progress.”
Defining projects is crucial for setting realistic expectations and laying out a clear vision for a project life cycle. A project definition (also known as a project charter) is a document that establishes the key objectives and terms of a project.
Good project definition paves the way for on-time and on-budget delivery because it lowers the chance of scope creep, budget overrun, and employee burnout. It’s safe to say that leaving these terms undefined can result in significant roadblocks.
A project definition is also important as a reference document that stakeholders and project personnel can return to during the project life cycle.
What is a project definition?
The project management life cycle can be broken down into phases. The PMBOK (Project Management Body of Knowledge) labels these as the initiation, planning, execution, controlling and monitoring, and closing phases. Generally speaking, the project definition should be laid out sometime during the initiation phase.
Before getting started, it is crucial to define the parameters of the project. Ask yourself and involved stakeholders these questions:
- What are the project’s goals, objectives, and possible limitations?
- Who is the project sponsor? Who is the project manager?
- What are the project deliverables?
- What risks should stakeholders and project managers be aware of in this process?
Identifying risk is a useful consideration because it aids in contingency planning. Think of the last time something you did went 100% according to plan. That rarely happens, so heading off problems at the pass is a crucial factor to on-time and on-budget delivery.
It is also useful to insert a statement about what will not be delivered over the course of the project. By including a statement about what is out of scope, the project’s expectations are managed and outlined from the start.
Scope creep becomes a little less likely when parameters are outlined in this way. Both sides are aware of the project's guard rails and project leaders can manage client expectations from the outset.
The professional services industry, by nature, is very client-focused. PS firms grow their business by providing a service (i.e. legal services, accounting services, etc.) or carrying out a campaign or project on behalf of a client or customer (i.e. marketing or IT consultancy).
Therefore, it is necessary to prime the process for success by defining the scope, deliverables, and other terms. This creates transparency and understanding between the PS manager and the client.
All of this can be laid out in a document called a professional services agreement (PSA).
What is a PSA agreement?
Each client-vendor relationship is unique, and so a professional services agreement doesn’t look the same for every contractor or consulting team. Adapting your PSA to each client’s specific needs is a good starting point for a project.
A client may also have additional internal requirements about information that needs to be included in a project services agreement. For instance, if the project is particularly sensitive, there may be a section on confidentiality.
These agreements and contracts can be modified to create a bespoke overview suited to the nature of the project and the industry.
Sections in a PSA can include:
- Scope of work
- Work schedule
Let’s say, for example, that your company hires an app development firm to create a mobile app to provide educational resources for a professional certification.
For this particular project, sections on deliverables and work schedules may outline a timeline where the team is required to create content such as test questions, prototypes, and mockups for how the app will look and function, as well as beta testing to ensure as few bugs are present upon launch.
In addition to phases of the project, a PSA would also include information like who the project manager is as well as change order. A change order section outlines what will happen if the project scope changes. For instance, it may stipulate that any requests to expand the scope of a project be put in writing and must be agreed upon by both parties.
Details about a project’s budget and how your firm will be paid should also be included in the project services agreement.
What are the different types of professional services contracts?
As previously mentioned, a professional services contract is not a “one size fits all” document that looks exactly the same for every project or business.
These contracts can differ depending on the project type, client fee and billing structure, length of project, and nature of the services being provided.
A few of the different types of professional services contracts can include a fixed price contract structure, time and material contract structure, not to exceed contract structure, managed services contract services, retainer-based contract structure, and recurring service contract service structure.
Fixed-price structure vs. retainer-based contract structure
Two of the most popular pricing structures are the fixed price contract and retainer-based contract.
In a fixed-price contract structure, there is an agreed-upon set of services or deliverables that the PS firm will provide for a fixed fee. This may not be ideal for some industries because it usually won’t take into account the fluctuating costs of materials. If your business doesn’t require reliance on vendor costs, you may find value in a fixed-price structure.
A retainer-based contract represents a different type of agreement where an organization or individual pays a one-off or ongoing fee to cover the cost of the services to be rendered. Retainer payments are separate to billable work that may be charged, such as trial work in the case of a lawyer. This type of contract structure is common in law and consultancy services.
Writing a Project Scope Statement
What is a project scope statement?
A project scope statement seeks to identify the key aspects of a project in an easy to read table document. At the very least, this document will include:
- Requirements and deliverables
- Constraints and assumptions
For those who have never created a project scope statement before, there are many examples and templates available online.
This is all-important because it adds to the breadth of documentation and information that teams rely on for effective and comprehensive project management.