Implications of Tradeoffs on projects
Introduction
The trade-off decisions are made all across the
project life cycle which varies considerably. This is especially true if we
specifically talk about scope, schedule and cost. One of the most typical progressions
that I see begins with planning our projects within a set budget and a fixed
schedule. Once the project is defined and planned, those requirements and the
plan itself are under formal change control so we can’t mess with them without
more formal consideration and approval. In many organizations, that nuance gets
lost along the way. This paper primarily focuses on the implications of the
tradeoffs made at various stages of project life cycle and few examples will be
presented. [1]
Discussion
Most projects have trade off
relationship between the time taken to complete a task and the cost of said
task. In general, this relationship will be driven by an proportional
relationship: taking too long will increase the cost as wages and other costs
will increase; and an inversely proportional relationship: reducing the time
requirement sharply is likely to increase costs as more direct materials,
overtime and other resources must be directed towards the task. As such, there
generally exists an optimal time for any task, at which overall costs are
minimized. [1]
In case of metro bus project (in Lahore), we
witnessed some serious tradeoffs which are now being criticized. [4] Some were
in the form of scope whereas others were in the form of costs and time. In my
opinion, the planners planned the scope of this project in such as way that it
satisfies the hidden need along with the need of transportation. Considering
that the numbers of road accidents have significantly reduced after the
implementation of this project, it seems as if the primary objective was to
reduce the road accidents; but as long as the need in not realized there is no
point designing the scope of projects in accordance with the hidden need. Due
to which this project faced lot of criticism and people started calling it as
“Jangla Bus”. [3] There was a need to first realize this actual need and then
effort had to be made to solve this need or to make the awareness about the
need which is being solved. If this had been the case then lot of criticism
could have been ignored. [2] In addition, this
particular project had tremendous direct costs directly associated with the
activity level of a task or project; which are often referred to as variable
costs. For example, it included hourly wages, and materials etc. This project
was planned to be completed within shorter period of time. In the process huge
trade off was made as whenever the speed of a task is increased, direct costs
generally increase also, due to the law of diminishing returns. Where there was
a need to employ fewer work forces, they had to employ much more than the
standard level. Not only this the additional overtime premiums had to be paid
to nearly every worker as lot of overtime was needed to complete the project in
given time. According to Punjab Government, approximately Rs. 30 billion were
spent. Subsequently, billions of rupees were wasted to complete this project in
shorter period of time. Normally if a project is at risk of delays, the schedule
can often be compressed, or crashed, through the investment of more resources
and an increase in direct costs; but this should only be done as long as you
are unable to meet the requirements. In order to determine the optimal project
time and cost, a project manager of Metro Bus project should have understood the
minimum time in which a task can be completed and how much this will cost as
well as the normal time in which a task could be completed with minimum cost;
and how the costs will vary with the time taken. If we analyze this particular
project we will find millions of rupees wasted only because mismanagement of
tradeoffs. Considering that the total annual budget (for the year 2012-2013) of
health and education in Punjab is about Rs. 25 billion and Rs. 25 billion
respectively and Punjab is less than the total amount invested on this
particular project, we must say that for this mismanagement of tradeoff we had
to pay highest level of cost in terms of opportunity cost. [5]
Conclusion
In situations you may need more project management
resources such as money and/or resources and/or time to manage the project, due
to which sometimes tradeoff becomes a need. This risk can also impact the ability
to meet the customer requirements. In addition to risks, other changes can occur
on your project for any number of different reasons. This is when you’ll need
to examine the project trade-offs. To examine the project trade-offs, we have
to be clear about the impact that any change will have on the project-whether
it be more time, budget, resources, etc. as every tradeoff made might result in
some serious implications.
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