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PRINCE2 principles

21 Mar 2022 By

Continued business justification

As already described, the 7 PRINCE2 principles are the bedrock upon which everything else in PRINCE2 is based. Your project is not a PRINCE2 project unless you are applying all these principles.

PRINCE2 continued business justification principle infographic

The first principle is that a project must have continued business justification. This means that projects must be aligned to the business objectives of the customer organization. This principle prevents organizations from starting or continuing projects that cannot be validated in terms of corporate strategy.

The primary way in which the customer organization can determine whether the project has continued business justification is by having an acceptable business case. The business case is perhaps the most important of all of the 26 management products.

This is because the business case describes the reasons for doing the project and justifies that the investment is worthwhile. It does this by forecasting the expected benefits that the project will realize, and weighs these up against forecasts for both the project costs and ongoing operational costs.

It also considers the timescales for both the project and the operational timescale (i.e. the period of time over which benefits shall be realized by using the project’s products. The business case also summarizes the main risks to the project.

The business case is initially developed in outline form before the project begins and is refined in more details during the initiation stage of the project. It is then updated at the end of each stage to reflect updated forecasts for time, cost, benefits, and risks. At the end of each management stage, the business case is reviewed to decide whether the project should continue.

Therefore, in PRINCE2, investment decisions taken to determine whether the project is a worthwhile investment is not just a one-off decision taken early on at the beginning of a project but are a series of ongoing investment decisions. The question being asked is “is the project still a worthwhile investment of not?” If not, the project should be closed. If it is, then the project can go ahead to the next stage.

Defined roles and responsibilities

It is important that on every project, the project decision makers are clear about what is expected from them in terms of their level of authority to take decisions, who they report to, and what their responsibilities are. PRINCE2 defines a flexible project management team structure which is suitable to be used on any type of project.

PRINCE2 defined roles and responsibilities principle infographic

Within this project management team PRINCE2 defines a set of roles and responsibilities which can be adapted to suit the needs of each project. In PRINCE2 the project management team are appointed even before the project begins and can be refined as needed throughout the project.

By clearly defining the roles and responsibilities of the project management team, it helps to avoid the problems which can occur when people are not clear what is expected from them. These types of projects are often beset by communication problems and are a common reason projects fail.

Learn from experience

Ask yourself the question about the projects which you have experience of: “are the same problems and mistakes often repeated across multiple projects?” If the answer is yes, then applying this principle can help you avoid the mistakes from the past.

PRINCE2 learn from experience principle infographic

PRINCE2 recommends that earlier projects are assessed for any lessons that can be applied on the current project even before the current project is initiated. When thinking of lessons, it is useful to consider what things went well and what things went badly from earlier projects. These are captured and are incorporated when planning and developing approaches for any new project.

Lessons may be learned during a project which might be useful on the current project or later projects and so must be captured and incorporated into any later plans or approaches.

At the end of a project all the lessons learned can be reported as part of an end project report which can then be passed onto later projects.

Focus on products

In PRINCE2, even before the project begins, there is a need to understand and define what must be delivered from the project to ensure the benefits are realized. This is done by writing a project product description. This is written by the project manager in consultation with users. Its purpose is to understand the features or characteristics of the project product (i.e. the one handed over to users at the end of the project) which will make it acceptable to the customer.

PRINCE2 focus on products principle infographic

By developing and agreeing the project product early on, this principle focuses attention on the scope of the project and be useful when developing initial estimations for the time and cost required to build the product.

When planning each later stage, more detailed product descriptions are developed for the major products of the project and are incorporated into the relevant stage plan. This means that each stage plan contains the details of what will be delivered and the job of the project manager is to ensure these products are delivered at the right level of quality within the agreed constraints of cost and time.

So, when planning either the project or a stage, attention is focused on what will be delivered before a decision is taken to go ahead to the next stage and spend any more money.

Manage by stages

In PRINCE2 a project is broken up into several management stages. Every project must have a stage called the initiation stage which is where a detailed business case, project plan, and approaches for managing risks, issues, changes, quality, benefits and communications are developed. Subsequently, there are one or more ‘delivery’ stages which are management stages where the specialist products are developed.

PRINCE2 manage by stages principles infographic

Before going ahead to the next stage, the updated business case is reviewed to determine whether the project continues to have business justification. If it does, then the project can move into the next stage.

As previously mentioned, if business justification no longer exists, the project should be closed. Therefore, in PRINCE2, a management stage boundary forms a ‘Go/No go’ decision point and forms the main control for the project board, which is the main decision-maker on a project.

Manage by exception

In PRINCE2, it is assumed that the people on the project board are senior people who have little time to spend on the day-to-day management of the project. The day-to-day management is the responsibility of the project manager.

The project board therefore delegates day to day management for a stage to the project manager within agreed ‘tolerances’ for the objectives of time, cost, risk, and scope.

PRINCE2 manage by exception principles infographic

Providing the project manager is confident that he/she can deliver the stage plan within these agreed tolerances then he/she can take corrective action to get things back on track if things are running late of going over budget.

If however, the project manager cannot deliver the stage plan within these agreed stage tolerances then this is known as an ‘exception’ in PRINCE2 and this must be escalated to the project board for a decision. This therefore is a very efficient use of senior management time and means that the project board are only involved in taking decisions as and when the need arises. (They are of course still involved in taking the key ‘Go/No go’ decisions at the end of each stage).

Tailor to suit the project environment

No two projects are the same. The level of control needed for a multi million-dollar project is much greater than that required for a project only costing ten thousand dollars.

The number of stages required for a high-risk project is likely to be greater than a low-risk project. The level of control needed for bank managing a million-pound project is likely to be less than that required by a small company managing a similar cost project.

PRINCE2 | PRINCE2 tailor to suit the project environment principle infographic

In other words, if practitioners simply apply the whole of the PRINCE2 method blindly to every project, they are not likely to gain the benefits of the method. Therefore practitioners must tailor PRINCE2 to suit the needs of the project environment. This is done by tailoring the PRINCE2 processes, PRINCE2 Themes, and management products.