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How the PRINCE2 Directing Guide helps with decision latency

Blog posted by: Henny Portman – Partner at HWP Consulting, 06 October 2020.

A businessman looking at project folders

The CHAOS Report’ 2018 from the Standish Group sees decision latency as one of the key factors why so many projects fail. In other words, if you want to improve project success, you have to speed up your decision-making. The Standish Group studied this decision latency for over a decade and stated that a project will create one decision for every $1,000 in project labour cost. If it takes hours to make a decision, you must find ways to reduce this interval by decentralizing the decision making and eliminating steps that take time but have no value, e.g. too many meetings. Simply reducing decision latency can improve your project performance by 25%.

If we look at PRINCE2®we can find several solutions on how to speed up decision-making. Let us explore a few.

One of PRINCE2’s principles is ‘manage by exception’. A PRINCE2 project has defined tolerances for each project objective to establish limits of delegated authority.

An example: A big organization wanted to reduce costs by setting up a shared back office service centre for several business units located in different countries. After a couple of months, it looked like the project was already off-track. After a few interviews, my conclusion was that it was unclear to the project manager when he could decide on his own or when he had to escalate an issue. In practice he escalated every issue. We agreed to have a facilitated workshop to discuss the conditions in which the project manager needed to escalate an issue in case of scope changes, time or budget overruns, risks, quality or benefits by setting a bandwidth.

Tolerances

The way PRINCE2 handles exceptions depends on how tolerances are applied or agreed for a given situation or plan. Tolerances are the permissible deviation above and below a plan’s target for time and cost without escalating the deviation to the next level of management. They are applied at project and stage level and may also be implemented at the level of individual work packages.

Fewer meetings

If you combine this with the principle ‘manage by stages’, even the number of project board meetings could be reduced. A PRINCE2 project is planned, monitored, and controlled on a management stage by management stage basis. Project board meetings will take place between two stages but will only take place when decisions need to be made.

Agile

You could even think about self-organizing agile teams. These teams can work within certain boundaries and this only works if you, as a project executive or sponsor, set these boundaries. Without these boundaries (or, as we just have seen, tolerances) the team feels unsafe and there could be a lack of focus and as a result, insufficient progress. These boundaries are transparent when they can make decisions on their own, or when a product owner can decide to accept certain new features without escalating to the project board (you might refer to them as a product manager or chief product owner).

This was a brief impression of some of the roles, duties and behaviours of project board members. If you want to learn more about this, the Directing Successful Projects with PRINCE2 guidance covers frequently asked questions. These include what is expected from the project board, what the project board expect from the project manager, how to know whether the project manager is applying PRINCE2 appropriately, how to delegate authority to the project manager and keep control, which decisions the project board is expected to make, what information is required and/or available to help make those decisions, what an effective project board look like, and many more.

 

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Original article link: https://www.axelos.com/news/blogs/october-2020/how-prince2-directing-guide-helps-decision-latency

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