Management by Exception (MBE) is a critical feature in Project Management. When Project Managers are assigned for managing a project, they are not given a blank check for doing what they please. The days of the Triple Constraint are bygone, and now we are able to identify a wider and larger different nature of constraints, like stakeholder (e.g. you can meet only once a month with your customer; or you are not allowed to speak directly to your other customer’s providers who responsible for completing some Work Packages of your project). But according to PRINCE2, the most important constraints are Scope, Time, Cost, Quality, Risk and Benefits. In fact, PRINCE2 calls them “performance targets”.
The point is that a Project Manager can’t make all the decisions of a project. He is limited by a set of constraints and must be restricted by them. Management by Exception provides the project goverance environment.
In a PRINCE2 project there are three levels of management: Directing, Managing and Delivering.
The Project Manager is managing the project in the middle level of this “management sandwich”. The constraints are defined by the upper level and are the general rules of the project. The Project Team is at the Delivering level, focused on building the deliverables. Project Directors or Executives are at the Directing level, who make the final decisions when constraints are at risk.
Also in a PRINCE2 project, Project Directors are confident about the Project Manager, by applying Management by Exception. They don’t force him to meet with them every week to make control and command decisions. They give him the project objectives and the aforementioned constraints, and tell him to report only any exceptions to the agreed upon plan.
So, “Management by Exception” is a great way of improving efficiency and giving some autonomy to the Project Managers. But managing a project is something very complex and exceptions not only may occur, they are inevitable. In the following I explain why.
The Project Manager for meeting the project objectives, will plan how the “performance target” will be met by planning the deliverables (“Products” in PRINCE2 terminology) that will be delivered. Then he will plan the sequence of activities that will performed in the project, the effort, the schedule, the budget and, the resources required.
Next the Project Team will start to work on this performance targets. While the Project Team performs the planned activities, the Project Manager will monitor and control progress against the plans and define corrective actions to any deviations identified during the project.
The problem is that if performance targets are very restrictive, exceptions will always occur and this efficiency model will fail, because Project Directors need to make decisions many times during the project (in that case, they would be managing, instead of directing).
No one can forecast with a 100% accuracy costs and time. Both estimates are done at the beginning when we don’t have all the information available. And even if we had it, also things always change and can vary.
The solution that provides PRINCE2 for this is establishing “tolerances” to constraints, providing the Project Manager with a limited flexibility. This flexibility will provide him a space for unexpected things without overstepping some agreed upon limits – and therefore, without the need of scaling to the next level of management.
Following I provide you an example of establishing tolerances. Imagine that a project is planned to cost 500.000 dollars and scheduled to be delivered in one year. The truth is that this figures are very rounded (exact). Probably the project will cost around 500.000 dollars and more or less it will take a year, but it is nearly impossible to do it exact.
So tolerances must me applied by the Project Director to the Project Manager. For example, budget can be +$20.000 and -$30.000. This way, if the project is inside this tolerances, the project will be successful (in cost terms).
Also, with time also it is required to establish some tolerances. For example, if it is finished +4 weeks or -5 weeks, the project will be also considered as successful (in time terms).
This way, now Management by Exception will be possible for the Project Director (PD) and both, the PD and the PM, will have a framework of freedom for working each other in their own responsibilities.
Have you ever felt in the middle of a “management sandwich”?
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