Studies show that over 85% of projects have a value below $100,000. These are projects where the bulk of the work happens within only a few weeks to a month.
Because of their short duration, these types of projects have their own unique set of circumstances that warrant a slight adaptation of project management methodologies. Googling project management search terms or buying a project management book might just leave you wondering how it all applies to your small projects.
This is particularly noticable in project scheduling, where you are budgeting and measuring tasks that span only a few days.
What is the correct way to manage small projects professionally?
Let’s start with the Project Management Body of Knowledge.
The Project Management Body of Knowledge
The primary reference for project management in most of the world is the Project Management Body of Knowledge (PMBOK) by the Project Management Institute.
But since the PMBOK is a project management textbook, it is a comprehensive guide for everything related to project management. Effectively, it has been written to cover the management of megaprojects, and using it for small project management involves simply scaling down the practices and procedures described therein.
Project Phases
The PMBOK divides projects into 5 phases:
- Initiation
- Planning
- Execution
- Monitoring & Controlling
- Closing
For small projects you can assume the five phases occur in chronological order with the exception of the 4th, Monitoring & Controlling, which happens simultaneously with the 3rd phase, Execution.
The Knowledge Areas
Within each of the five phases, various “knowledge areas” are consulted in order to carry out the work within the phases. These knowledge areas contain the technical know-how of the project management profession. They do not occur in chronological order, rather the knowledge areas are consulted whenever the management of the project requires it.
The 10 knowledge areas are:
- Project Integration Management
- Project Scope Management
- Project Schedule Management
- Project Cost Management
- Project Quality Management
- Project Resource Management
- Project Communications Management
- Project Risk Management
- Project Procurement Management
- Project Stakeholder Management
Project Management Documents
To manage projects professionally the project manager or their designate produces certain project management documents which assist them in managing the project and communicating the project information. The PMBOK mentions many specialty documents because it is a textbook that is meant to cover megaprojects, but for most small projects a simple document list can look like this:
| Phase | Document |
|---|---|
| Initiating |
|
| Planning |
|
| Execution |
|
| Monitoring & Controlling |
|
| Closing |
|
Project Initiation
The first phase in the PMBOK is the Initiating phase. This phase includes the creation of the project and definition of lines of authority.
PMBOK, 6th Edition, Standard for Project Management, Section 2, “Initiating Process Group”
The Initiating Process Group consists of those processes performed to define a new project or a new phase of an existing project by obtaining authorization to start the project or phase. The purpose of the Initiating Process Group is to align the stakeholders’ expectations and the project purpose, inform stakeholders of the scope and objectives, and discuss how their participation in the project and its associated phases can help to ensure their expectations are met.
There is only one major project management document that is created during the project initiation phase.
| Phase | Document |
|---|---|
| Initiation |
|
Although I have included the project charter in this article, for small projects you might not need it. Often it is clear that a project is ready to start and/or adequately funded, and the major stakeholders are obvious. A contract between an owner and contractor can serve as a project charter, especially if it contains a statement of work. Many times the project charter is necessary only in projects that are undertaken internally.
Project Planning
The second phase is tremendously underrated. PMI’s research suggests that most project issues can be avoided with a little extra planning.
PMBOK, 6th Edition, Standard for Project Management, Section 3, “Planning Process Group”
The Planning Process Group consists of those processes performed to establish the total scope of the effort, define and refine the objectives, and develop the course of action required to attain those objectives. The processes in the Planning Process Group develop the components of the project management plan and the project documents used to carry out the project.
There is one major project management document that is generated during the planning phase, but it is a big one.
| Phase | Document |
|---|---|
| Planning |
|
The project management plan is not optional even for small projects. It communicates to everyone how the project will be managed. It also includes the two all-important items of schedule and budget, and describes how they will be managed. The project sponsor must approve the project management plan after which it then becomes official. After approval all project changes must be re-approved and the changes tracked in a change log.
For small projects the four minimum essential parts of a functioning project management plan are as follows:
- Scope Statement: Identifies the work the project will perform and draws suitable boundaries around the project.
- Work Breakdown Structure: The task breakdown of the project.
- Project Schedule: As concise or as detailed as necessary for the project. It could be as simple as a completion date for the whole project, or a task by task breakdown.
- Project Budget: Also as concise or as detailed as necessary for the project. It could be as simple as a budget for the whole project.
Here is an example of a simple task breakdown together with a schedule and budget which might be suitable for small projects.
| ID | Task | Start | End | Budget |
|---|---|---|---|---|
| 110 | Dig trench | June 1 | June 3 | $5,000 |
| 120 | Lay cable | June 2 | June 5 | $7,000 |
| 130 | Backfill | June 5 | June 8 | $3,000 |
| TOTAL | $15,000 | |||
The following parts might be included over and above the mandatory sections outlined above, as required.
- Critical Success Factors: The items that define project success. Things like coming in under budget, meeting deadlines, satisfying certain stakeholders, etc.
- Quality Management Plan: The identification of the quality parameters that the project must meet and how they will be achieved.
- Risk Management Plan: The identification and prioritization of the most important risks to the critical success factors.
- Human Resource Management Plan: The people needs of the project. How the human resources will be acquired, managed and developed.
- Communications Management Plan: The communication needs of the project. Who needs what information, and when.
- Procurement Management Plan: The identification and management of the external purchasing needs of the project.
Project Execution
This is the third phase in the project, and it involves performing the project’s work. It includes the production of the project’s deliverables by the project team.
PMBOK, 6th Edition, Standard for Project Management, Section 4, “Executing Process Group”
The Executing Process Group consists of those processes performed to complete the work defined in the project management plan to satisfy the project requirements. This Process Group involves coordinating resources, managing stakeholder engagement, and integrating and performing the activities of the project in accordance with the project management plan.
Naturally, the PMBOK cannot address the technical details of every project in every industry. But there are several standard processes that happen during all projects which the project manager must be familiar with and apply to their project as necessary.
| Phase | Document |
|---|---|
| Execution |
|
These documents are as follows:
- Project Status Reports. The project manager produces reports that update the various stakeholders on the status of the project.
- Stakeholder Communication. As the project work progresses the stakeholders of the project are communicated with according to the Communications Plan (if applicable), a component of the project management plan.
- Change Logs. When changes to the project management plan are necessary, the changes are approved by the project sponsor and entered into the Change Log.
Project Monitoring & Controlling
As mentioned earlier, this step occurs chronologically at the same time as the Project Execution phase.
PMBOK, 6th Edition, Standard for Project Management, Section 5, “Monitoring & Controlling Process Group”
The Monitoring & Controlling process group consists of those processes required to track, review and regulate the progress and performance of the project; identify any areas in which changes to the plan are required; and initiate the corresponding changes. Monitoring is collecting project performance data, producing performance measures, and reporting and disseminating performance information.
This is the step where project managers earn their money. If you want to be a good project manager, you need to learn the earned value method and use it on a regular basis.
| Phase | Document |
|---|---|
| Monitoring & Controlling |
|
The earned value method calculates the project’s status on two fronts:
- Schedule (time)
- Cost
There are 4 steps to performing earned value analysis on small projects.
- Determine the percent complete of each task.
- Determine Planned Value (PV), Earned Value (EV), and Actual Cost (AC).
- Calculate Schedule Variance (SV).
- Calculate Cost Variance (CV).
Ideally the project management plan contains predefined “status points” but if not you will have to choose one. I think that weekly is a great status period for any size project, but any status period will do.
Step 1: Determine Percent Complete
To start the process, the percentage complete of each task needs to be determined. Whether you get the number from the project team or determine it yourself, each task in the project needs to be assigned a percent complete.
It is often advantageous to base it from some sort of repetitive metric, like the number of completed drawings, or number of fence posts driven.
Step 2: Determine Planned Value (PV), Earned Value (EV), and Actual Cost (AC)
These three variables represent the information you must collect from your project data.
Planned Value, also known as Budgeted Cost of Work Scheduled (BCWS), is defined as the amount of the task that is supposed to have been completed. It is in monetary terms as a portion of the task budget. For example,
- The task budget is $5,000,
- The task start date is June 1, and
- The task finish date is June 3.
If it’s June 2 today, the task is supposed to be 33% complete. PV = $5,000 x 33% = $1,650.
Earned Value, also known as Budgeted Cost of Work Performed (BCWP), is the amount of the task that is actually complete. It is, again, in monetary terms as a portion of the task budget. For example,
- The task budget is $5,000, (same as above)
- The task start date is June 1, and (same as above)
- The task finish date is June 3. (same as above)
Let’s say the actual percent complete of the task is 40%. EV = $5,000 x 40% = $2,000.
The Actual Cost, also known as Actual Cost of Work Performed (ACWP), as you might guess, is the actual cost of the work. Since most projects have these well defined via accounting or project management software, I will not go into great detail here. For the purposes of our example, let’s say the actual cost of the example task is $2,500.
| ID | Task | Start | End | Budget | PV | EV | AC |
|---|---|---|---|---|---|---|---|
| 110 | Dig trench | June 1 | June 3 | $5,000 | $1,650 | $2,000 | $2,500 |
| 120 | Lay cable | June 2 | June 5 | $7,000 | $0 | $0 | $0 |
| 130 | Backfill | June 5 | June 8 | $3,000 | $0 | $0 | $0 |
| TOTAL | $15,000 | $1,650 | $2,000 | $2,500 | |||
Step 3: Calculate Schedule Variance (SV)
Now that you’ve collected the three pieces of data from your project, it’s time to calculate the status of the project from the schedule perspective.
In our above example the schedule variance is: SV = $2,000 – $1,650 = $350.
A positive schedule variance indicates a task ahead of schedule (i.e. good). A negative schedule variance indicates a task behind schedule (i.e. bad). Positive = Good and Negative = Bad.
| ID | Task | Start | End | Budget | PV | EV | AC | SV |
|---|---|---|---|---|---|---|---|---|
| 110 | Dig trench | June 1 | June 3 | $5,000 | $1,650 | $2,000 | $2,500 | $350 |
| 120 | Lay cable | June 2 | June 5 | $7,000 | $0 | $0 | $0 | $0 |
| 130 | Backfill | June 5 | June 8 | $3,000 | $0 | $0 | $0 | $0 |
| TOTAL | $15,000 | $1,650 | $2,000 | $2,500 | $350 | |||
Step 4: Calculate Cost Variance (CV)
Just like the Schedule Variance represents the schedule status of the project, the Cost Variance represents the cost status of the project.
A negative cost variance means the task is over budget. A positive cost variance means it is under budget. Once again, Positive = Good and Negative = Bad.
| ID | Task | Start | End | Budget | PV | EV | AC | SV | CV |
|---|---|---|---|---|---|---|---|---|---|
| 110 | Dig trench | June 1 | June 3 | $5,000 | $1,650 | $2,000 | $2,500 | $350 | -$500 |
| 120 | Lay cable | June 2 | June 5 | $7,000 | $0 | $0 | $0 | $0 | $0 |
| 130 | Backfill | June 5 | June 8 | $3,000 | $0 | $0 | $0 | $0 | $0 |
| TOTAL | $15,000 | $1,650 | $2,000 | $2,500 | $350 | -$500 | |||
Because SV is positive and CV is negative, this example represents a situation where the project is over budget but ahead of schedule. To put it another way, there have been more tasks performed than were anticipated at this point, but the tasks have been performed inefficiently and the project will finish over budget if the current situation continues.
Other Project Status Indicators
Although the SV and CV are the minimum requirement and work well for small projects, there are other variables that are derived from them which you might want to calculate:
- Schedule Performance Index (SPI): The schedule variance expressed relative to the size of the task/project, for example, SPI = 1.3 means the project 30% ahead of schedule.
SPI = EV / PV
- Cost Performance Index (CPI): The cost variance expressed in percentage terms, for example, CPI = 1.2 means the project is 20% under budget.
CPI = EV / AC
- Budget at Completion (BAC): This is simply the project budget. It is used in the next few formulas.
- Estimate at Completion (EAC): The expected budget at the end of the project given the variances that have already taken place.
EAC = AC + BAC – EV
- Estimate to Complete (ETC): The expected cost to finish the rest of the project.
ETC = EAC – AC
- To Complete Performance Index (TCPI): The required CPI necessary to finish the project right on budget. For example, TCPI = 1.25 means you need to find 25% efficiencies to finish on budget.
TCPI = (BAC – EV) / (BAC – AC)
Project Closing
Closing projects is one of the most visible aspects of the project management to executives, but it is also the part most often skipped. It is the fifth (and last) phase within the PMBOK, and it has one major project management document.
| Phase | Document |
|---|---|
| Closing |
|
The Project Closure Report is specified by the PMBOK and includes final budget and schedule information, the final scope statement, discussion of any scope changes, and lessons learned for future projects. Other important items that are sometimes necessary for project closure include:
- Formal Closure: The Contract is closed and/or a completion certificate issued.
- Procurements: Completion certificates are issued to subcontractors after work is inspected.
- Final Details: As-constructed plans, final product specifications, product manuals, and the like are produced.
- Liabilities: Warranties, bonds, and insurance coverage are obtained as necessary.
- Release of Resources: Project resources such as people, equipment, and tools are formally released.
As you can see, the principles of project management are just as valuable to small projects as to megaprojects. They must be scaled down to be applicable but without professional project management even small projects will experience their share of problems.
Good luck and let me know in the comments if you have any other ideas or practices that work on small projects.
