Each project will define objectives which are expected to be met by the end of the project. The role of the project manager is to achieve these objectives within expected performance targets. These performance targets are: cost, time, scope, quality, risk and benefits.
The project manager will plan how these targets will be met by planning the products that will be delivered, the sequence of project activities that must be performed, the resources required and the time, cost and effort required.
These activities are then delegated to teams who perform the work according to the agreed constraints. Whilst the work is being performed by teams, the project manager will monitor the progress against plans, and take corrective actions to get the plan back on track when the plan starts to slip, which is inevitably what happens on projects.
Why is it that projects do not always go according to plan? Well, there are a number of factors. Firstly, it is often impossible to forecast with 100% accuracy how much something will cost and how long something will take to complete in terms of time. For this reason, a plan will contain “tolerances” for cost and time. These tolerances are laid down by the next level of management above. By setting tolerances in this way, the project manager is given some room to manoeuvre in terms of achieving the targets.
An example of cost tolerance would be as follows. Suppose a plan is expected to cost $10,000 dollars and take 10 weeks to complete. It would be unrealistic to expect that the work in the plan could be achieved for exactly this cost and delivered exactly at the end of week 10. So to avoid having to escalate every small slippage to the next highest management level, tolerances could be assigned for both cost and time to allow some leeway for the project manager to manage the work.
An example of cost tolerance might be to allow the project manager so spend within a range, starting a little lower than the $10,000 and finishing a little higher than this figure. For example, +$2,000 and -$1,000. This therefore would mean it would be acceptable to deliver the plan for any cost within the range $9,000 to $12,000.
Similarly, an example of time tolerance might be to allow the project manager to deliver anywhere between the start of week 8 and the end of week 12 i.e. -2 weeks/+2 weeks.Setting tolerances in this way is a key aspect of PRINCE2 and allows the project to be ‘managed by exception’.