Managing Small CAPEX Projects

by Emil Randa-Boldt

Summary

The classic project management methods can be scaled up and down depending on a project’s size and complexity. However, it is often seen that when dealing with smaller projects, that may not differentiate much from daily operations, it can be hard for the project manager (PM) to apply the standard tools for ensuring the quality of a project. What makes a project small can be defined in many ways. The conceptualizing of the small project in this article is: A small project starts out in the gap between day-to-day tasks and the organizational determined projects. The applied project management practice is determined by the responsible caseworker. To further clarify the context the focus is set on CAPEX projects.

The challenges of working with small projects are found to be present in the initial phases of a project and to obtain internal support/visibility in the organization. Recommendations of how to deal with these challenges are divided into three focus areas: Project owner and stakeholder engagement, Scope Definition and Communication. The content of the recommendations is based on the project management methods of PRINCE2 and PMI, where relevant points that are useful in context of small projects have been selected. The selection has been made from a personal experience perspective, and the experiences from other project management knowledgeable persons has been included in finalizing the recommendations.

This article is primarily addressing the certified project managers within e.g. PRINCE2 or PMI who are looking for guidance on what to focus on in the project management practice in absence of an organization generated project structure.

Introduction

When working in the private industry or public sector, all projects does not come in a classic scale such as building a bridge or developing a space rocket, where it is intuitive given - from all involved stakeholders - that this is a project, and that you therefore can adapt a project management setup to solve the project. In an organization you find many different tasks processed on a daily basis. What often happens is that some of these tasks actually are projects. A key challenge for organizations worldwide is to balance daily operation (“business as usual”-tasks) and transforming operation into projects that can develop their business in the right direction (p.9). No matter the size of a project, it is desired to always apply a certain level of project management to control the aspects of the project. Doing this will significantly increase the chances of delivering the wished outcome successfully.

Even if the organization succeed in identifying the small project hidden in the day-to-day work, it can be hard for the project manager (PM) to apply the standard tools for ensuring the quality of a project. That is due to the fact that time and resources allocated to run such a project are limited. The PM has to navigate in the project management jungle and chose to focus the available resources on key elements. This article offers some reflections and recommendations of how to handle this situation by 1) developing a set of bulletpoints to evaluate if a given task is actually a small project, 2) offering an overview of the possible challenges connected to a small project and 3) presenting recommendations of how to deal with the small project. All this is intended to help the PM understand the situation and provide a guidance of where to get started.

To further clarify when and where the tools in this article can be applied, the focus has been set on the organizational CAPEX projects (Capital Expenditure). What characterize a CAPEX project is that the project owner and most of the stakeholders are internal in the organization. Examples of CAPEX projects could be to in a production company where a machine on a production line needs to be upgraded, in shipping company where a new crane on a cargo ship needs to be replaced or in a accounting firm that need a new IT system.

The problem with small projects is that they go "under the radar", and not much research have been done on the subject. Therefore, the available sources on the field are mainly based on experiences from people working with small projects. The statements in this article are based on reflections from the authors personal experiences working in the gap between solving business as usual tasks and projects in a technical organization, and further substantiated by different sources also with experience from small projects. The guidance presented is primarily based on the acknowledged standards: PRINCE2 and PMI. The content of these methods has been shaped to better fit the challenges of small projects.

What makes a "small" project

When a need occurs in an organization it will in most cases land on a manager’s table. If the scope of the need has a substantial size and/or risk profile it will be send through the organization project system and a project organization will be establish to manage it. But in the daily operation it often happens that management just want to get many of the smaller needs “fixed” as quick as possible. Then the job lands on someone’s desk as a day-to-day task. The problem then arises if this task is not recognized as a project – if that is the case.

But how can these tasks be evaluated and be determined to have the potential of being a project. In PRINCE2, they define a project as “A temporary organization that is created for the purpose of delivering one or more business product according to an agreed business case” (p.8). From this definition none of the described tasks have the potential of being a project, due to the lack of a project organization. The PMI defines a project as “…a temporary endeavor undertaken to create a unique product, service or result”. (p.13). When evaluating a task, you will often find it complies with the characteristics “temporary endeavor” and “unique product, service or result”. In addition to the PMI definition, are here presented some criteria that should be considered when evaluating if a task scope shall be treated as a project :

• Is it a temporary endeavor.
• Is it a unique product, service or result.
• Do the scope include unfamiliar elements.
• Will it implement some sort of change.
• Will several organizations/departments/stakeholders be involved in the process.

If the conclusion of the evaluation consists of elements from the above criterias, you need to put on your Project Manager hat.

When a project has been identified as a project – you will need to define if this can be characterized as a small project. The more traditional tools to estimate the size of a project is by looking at estimated cost and time consumption, but that is relatively from branch to branch, and it is therefore difficult to make a set of generalizing rules. Also, risk profile is a crucial factor regarding larger projects, but when dealing with small projects the risks are often very limited . The conceptualization of a small project in this article is as following:

A small project starts out in the gap between day-to-day tasks and the organizational determined projects. The applied project management practice is determined by the responsible caseworker --> project manager.

The challenges working with small projects

Many experiences the same challenges when working with small CAPEX projects. To help the project manager what to be extra aware of, here are a list of the main concerns:

A. The fact that many small projects erupt from an urgent need causes a tight time frame, which puts pressure on the PM to conduct a hasty process and further limits time for project management.

B. Because the project is elevated from a task by the project manager and not the organization, it may not be clear who owns the project, or it could cause the owner to not be fully engaged in the project. The owner is the one who should deliver the vital decision-making to develop the project .

C. The initial business case or job description is often not completely adequate and the root cause of the problem have not properly been identified.

D. Often the overview of involved stakeholders is not complete, which creates an uncertainty about whose needs should be taking into account and who the final solution should target.

E. Small projects often lack visibility in an organization, which in some cases can create conflicts or a risk of missing a synergy effect with other projects.

F. Informal work flow. When there isn't a formal project group there is no requirements to what documentation and processes the project should have. Due to this informal work flow it is easy to forget creating essential documentation.

The sum of all these challenges contributes to the risk of not solving a project within the budget and time. Due to the small scale of a single small project the economic loss is limited, but the total of many small projects can generate a significant summarized waste. In some cases, it is not necessarily the waste of funds and time that is the main concern, but the derived effects of e.g. break downs, frustration in the organization, a stressful work environment, etc. Therefore, it is important to bring as much quality as possible into small projects.

In this case the focus is on CAPEX projects, therefore the main challenges are directed internally in the organization. Beside the challenges listed in this section, it is important to have general knowledge of project management and an awareness of potential hazards.

Recommended Focus and Tools

The available project management methods and tools are endless. When working with larger project they are a necessity to structure the project, assign roles, etc.. But when working with smaller projects you do not have the time to go through all the steps, and you have to adapt the methods to your own and the specific project’s needs (p.31-37). That do always apply no matter the size of the project, but it is a more challenging task when you are further limited on resources and time - which is the case with small projects.

It is difficult to make guidance that covers all types of projects in different organization. By looking at the challenges described in Section 4, it is clear to see that most of them can be mitigated in the initial phases of a project. In the following tree sections some concrete recommendations are presented to address the challenges. It is not a step-by-step guide, but three focus areas that needs to be considered.

Project owner and Stakeholder engagement

• Identify project customers: The customers are the most important stakeholder in a CAPEX project because the scope often is to deliver a specific solution that they will benefit from. The customers are also often the ones who deliver the feedback from which the project scope is defined. To identify the stakeholders is a key element in project management (p.503-505). This is easy to forget working with a small project, because the scope seems so narrow. The PM tends to forget to search further in the organization to spot other potential stakeholders. Also, due to the low visibility in the organization, the project is overlooked by potential stakeholders. An idea would be to interview the main stakeholder in search for other stakeholders so the final solution targets as wide as possible (be careful of the projects do not lose track).

• Project Owner engagement: The project owner is often a busy person handling multiple projects, and the small projects have the least attention. Therefore, the PM should develop a strategy of to how to communicate with the specific project owner to gain the "go-aheads" that are required to solve a project. That strategy should include format and content of documentation so the project owner efficiently can get an understanding of the problem and the possible solutions, and on behalf of that make a decision. Do never present half results or solutions for the project owner. Don’t be searching for what the project owner thinks - only present documentation from which the project owner can make a decision.

Scope definition

• Mini Business Case: Due to the informality in small projects a proper documentation of the scope or business case of a project is often forgotten. The PM should in the initial phase make a mini business case on basis of relevant input from stakeholders. That case should as minimum contain a description of the issue, project goals, list of deliverables, a simple cost/budget estimate (often based on experience) and a time schedule containing important milestone . This document does not have to be very formal and contain a lot of information. Keep it to one or two pages and primarily describe content in bullets. The business case should be the foundation of dialog with stakeholders, and through repeating mitigation the case will become more and more precise and solid. Before any more detailed planning and execution can start, all important stakeholders should agree to the final business case, and the project owner has to approve to it. This document can be the only formal document which has to be shared between all involved stakeholders. Note: If there is time for it and it seems relevant for the project, potential risks can also be mentioned in the mini business case.

• Time estimation: The often narrow time frame for a small project is also one of the issues that needs extra attention. The time issues can be divided into two categories. The first is delivery time of essential items (e.g. machinery/spare parts) that may not be possible to acquire before a given date. The second is that implementation of a solution is fixed on a specific time period (e.g. pause in production). It is important as fast as possible to gain a overview of whether it is even possible to deliver a solution at the required time. In most cases is it possible to obtain some estimates from subcontractors. From these estimates a high-level plan should to made. This plan will be reviewed and edited throughout the project (p.95).

Communication

• Overall communication strategy: Stakeholder engagement and scope definition are the two main objectives in the initial phase, but to success with those, a general communication strategy is vital (p.360-363). It is important that the PM finds a balance in delivering documentation to inform involved stakeholders so he doesn’t drown in delivering an unnecessary amount of formal project management paperwork.

• Visibility: Most organizations keep track of current and future project in a systematic way. Small projects are often forgotten and are not included in this overview. If possible, do what you can to get a small project included in organizational plans. Is it not possible, then create the visibility in the most banal way - inform colleagues what you are working on, use your network within the organization, etc. By gaining visibility it becomes easier to connect with relevant stakeholders and find synergy with other projects.

Limitations

The recommendations highlighted in this article are primarily based on selected parts from the two project management methods - PRINCE2 and PMI. The selected practices are simplified and adapted to concern the challenges which a presented regarding small projects. There are many more aspects to conduct project management which are not presented in this article, but could be relevant as well. It is important to remember that dealing with projects there is no right or wrong, and it is impossible make a "one-size-fits-all" approach. Also it is important to understand that the complexity of organizations and projects variates, and the recommendations presented here may not be applicable in all organizations. What could be interesting is to have a dialog in your organization of how to deal with small projects. Maybe developing a structured approach that better fit your specific organization would be beneficial. This is not included in this article but is a very relevant subject to create better management of small projects.

Annotated Bibliography

• Rowe, Sandra F: PMI Conference paper (2007): Managing and leading small projects. This paper do also look into how to define a small project and reflects on the roles and required leading capacities of the project manager. https://www.pmi.org/learning/library/managing-leading-small-projects-7245

• Project Management Canvas a widely used tool to create a simple overview of a project. This could be a concrete supplement to create a structure in the informal work flow and be way to communicate the different aspect of a project to the organization/stakeholders. http://www.projectcanvas.dk/

• Jennifer Bridges, PMP (2015). Youtube video: How To Manage Small Projects - Project Management Training. This video presents a quick overview of some of the same themes given in this article, but do also provide some idea that can be introduced in the organization to better handle small project. The video could be the the set off to a dialog in an organization of how to develop some concrete templates or tools the project managers could use when starting up projects. https://www.youtube.com/watch?v=Ofws8Tl0UXg