Project management is a client-focused process that significantly increases the probability of providing the desired results to the client. It can help an accounting firm plan its resources more effectively and ensure that work is delivered to clients in a timely manner. The project management methodology enables an accounting firm to manage its engagements prospectively, not retrospectively, such as through time sheets. When properly implemented, project management can provide your firm with a competitive differentiation by defining the success of your firm the same way your clients do-through results. This article explains the important tools and objectives underlying project management.
WHAT IS A PROJECT?
Most accounting engagements clearly qualify as projects. According to the Project Management Institute (PMI), a project is "a temporary endeavor undertaken to create a unique product, service, or result." Further refining two words in this definition provides tremendous insight into project management. Those words are temporary and unique.
To understand a project as temporary is to understand that it must have a clearly defined end. For CPAs, this would mean a set of client-specific deliverables, such as a tax return, a compilation or review, a cash flow projection or an audit.
The unique aspect requires an understanding that, while you may have participated in similar projects, each one is truly different. There are no "plain vanilla" tax returns or "standard" audits. Each one has a slightly different set of goals and objectives and, more importantly, they clearly involve different constraints and client personalities. Nowhere in the definition of a project is there a provision for the number of hours spent on the job. It cannot be said that, if a project (engagement) is believed to require less than X hours, it is not a project.
SCOPE
What needs to be clearly defined under the PMI definition of a project is the "sum of the products, services and results" you want to achieve. This is the scope. A scope does not take the place of an engagement letter. For a project, the scope can go well beyond a standard engagement letter. A properly written scope document has some essential elements. They are:
Scope statement. The scope statement defines in one sentence what the project will accomplish. An example scope statement would read: To provide (end-product) on or before (due date) and at a price of (dollar amount). This statement addresses three specific subelements: scope, due date and price. Although this statement appears at the beginning of the scope document, it is easier to write after the rest of the document is completed and an overall idea of what is to be provided emerges.
Objectives. Objectives answer the question, "What does success look like?" They are high-level statements that explain exactly what the project's desired results are, such as to produce a tax return for a client. Since they are generally actions, they should begin with verbs, for example: produce, create, develop; followed by specific, measurable, attainable, relevant and time-sensitive (SMART) items to be accomplished. An objective should be, for lack of a better term, objective; this means it is or is not accomplished by the aforementioned due date. Something that would happen as a longer-term result of the engagement, for example, an increased number of inventory turns, should not be listed as an objective.
Constraints. Constraints are applicable restrictions that affect the performance of the project or the scheduling of activities, or "risks in waiting." They are limitations that could prevent work from being accomplished. It is important to identify the constraints as a starting point for a later conversation about risks. Common constraints are found in the following areas: technical, financial, operational, geographic, time, resource, legal, political and ethical. Constraints are known facts. An example of a constraint might be the poor quality of data available from systems.
Project structure. Each project must have an overall organization. In short, your project structure is the organization chart for the project. Most projects require you to assign at least three roles: (1) an executive sponsor, (2) a project manager and (3) a team member or leader.
Roles definition. Once you have outlined the project structure, it is important to define each role within the project. Each role must have specific responsibilities. These can and will change from project to project.
Team definition. This is the list of people and the roles they are playing on the project. Once you define the structure and roles, you need to assign people to the roles. In large projects this is called resource planning.
Assumptions. Assumptions are beliefs about the relationship that serve as the starting point for project definition. Be sure to evaluate each assumption in terms of it being true, real and certain. Another way of looking at assumptions is that they answer the question, "What should we not leave unsaid?" An example of an assumption would be: To attain success, the relationship between scope, due date and price must be maintained. A change to any one of these three interrelated variables will affect the other two (see sidebar "The Triangle of Truth," below). This means that, if the client wants to add or change something, the scope of the project will require an adjustment to either the due date or the price of the project.
Deliverables. Deliverables are the tangible results-the products or services of the project. Whereas the objectives are verbs, as stated earlier, deliverables are nouns. They are usually things you can physically touch. There are two types of deliverables: intermediary deliverables, which are to be used in subsequent tasks on the project; and final deliverables, which are turned over to the customer at the end of the project. Examples of intermediary deliverables include: the project plan, a training schedule and training manuals. Final deliverables will change depending on the project, but this is a critical section that expounds on the scope statement's end-product. For example: What specific audited financial statements will be provided?
Project change control. This section simply says that the scope document can be changed (amended) and defines the process for doing so.
Future project list. In addition to the obvious of being a list of possible future projects and major tasks that will be deferred until after this project is complete, the future projects list is important in that it allows us to define what is excluded from this project.
Approval. The scope should be signed and dated by the project manager and the client's executive sponsor.
If any of these elements are lacking, the project has a much higher risk of failure.
