Introducing PRINCE2 7 Principles
The PRINCE2 7 manual states that PRINCE2 is principle-based. This means that each PRINCE2 7 project should include the 7 principles and if even one of these principles is missing from the project, it cannot be considered a PRINCE2 Project.
I like the following definition of a Principle:
“The PRINCE2 7 principles are the guiding obligations that determine whether the project is genuinely being managed using PRINCE2 and ensures effective application and tailoring of PRINCE2 to any project.”
The PRINCE2 7 principles are the guiding obligations that determine whether the project is genuinely being managed using PRINCE2 and ensures effective application and tailoring of PRINCE2 to any project.
PRINCE2 7 is suitable for every project, regardless of type, size, complexity, importance, level of risk,
or delivery method (linear-sequential, iterative-incremental, or hybrid). Moreover, it can be used for
all types of organizations, whether commercial, governmental, non-profit, or not-for-profit.
Additionally, it is applicable for projects anywhere in the world, with its ability to incorporate
country-specific regulations, business models, and cultures.
To enable PRINCE2 7 to be used for such a wide range of projects, the method is flexible in how it can
be used for any given project.
Rather than prescribing what to do to align the method to the specific project, PRINCE2 offers guidance through principles. These principles enable the project management team to decide how PRINCE2 will be used on their project.
There are seven principles and they can be summarized as:
- ensure continued business justification
- learn from experience
- define roles, responsibilities, and relationships
- manage by stages
- manage by exception
- focus on products
- tailor to suit the project.
The seven principles offer flexibility, as they provide guidance on how the integrated elements of
the method can be applied and tailored to find the best fit for the project and its context while
keeping the integrity of the method.
So long as the principles are followed, PRINCE2 is being used effectively.
How the method is applied and tailored depends on the nature of the project and factors internal and external to the business as shown below
PRINCE2 7 Principles – Ensure Continued Business Justification
A PRINCE2 project must have continued business justification. This means that the reason to start the project must make sense from a business point of view and there must be a clear Return on Investment.
For example, the project will cost €20,000 but over the first 2 years, it will deliver a savings of €80,000 for the company. “Does the project have business justification?” is the same as asking “Does the project have a valid Business Case?” If at any time during the project, the expected Return on Investments falls, for example, by about 80%), then the project will most likely be stopped.
The Business Case document details the full Business Case, showing why the project should be done, the costs, the expected benefits and timescales. This material is also referred to as the business justification information.
As the Business Case document is one of the first documents created in a project, it will prevent some projects that have few real benefits for the company from starting. The business justification is then checked throughout the annual of the project.
This, for example, can happen at the end of each stage.
Even projects that are started to comply with new legislation require justification. For example, the cost of not complying with new legislation might affect the company’s market share or the company could lose clients. This could therefore be given a monetary value.
PRINCE2 7 Principles: Learn from Experience
PRINCE2 project teams should learn from previous projects. They should therefore take initiative to uncover previous lessons learned and take these into account during the life of the project.
I have mentioned before that Projects are unique, meaning that there is always something new. This creates an element of risk in each project. We can also say that each project has some unknowns which must be investigated.
Now you can see why PRINCE2 urges the project team to take the necessary initiative to learn from similar projects that may have been done in the same company and if not, then get advice from other external people (for example, bring in outside consultants).
“Learn from experience” covers the full lifecycle of the project, from Starting Up a Project, as the project progresses until the Project Closes.
Any lesson learned during the project should be documented. Documented lessons should be passed on so they are available for future projects.
PRINCE2 also states that it is the responsibility of everyone involved with the project to seek lessons learned rather than waiting for someone else to provide them.
PRINCE2 7 Principles: define roles, responsibilities, and relationships
In any project, people need to know what to do and what they can expect from others. From my perspective, this is one of the most important principles to get right from the beginning. PRINCE2 states that a project should have defined and agreed roles and responsibilities within an organization structure that engages the Business, User and Supplier Stakeholder interests.
Projects can have people from different departments or companies, so it is important that the project has a clear team structure, otherwise it might be impossible to manage the project.
According to PRINCE2, a project has 3 primary stakeholders. They are the Business sponsors, Users and Suppliers.
- Business sponsors are those who make sure the project delivers value for money
- Users are usually the people who will use the products once created. They receive the benefits
- Suppliers provide the resources and expertise to the project and produce the products.
These three primary stakeholders must be correctly represented in the Project Management Team.
To summarize the principle “Defined Roles and Responsibilities,” a good Project Management structure answers the question “What is expected of me and what can I expect from others?”
PRINCE2 7 Principles: Manage By Stages
A good way to go about doing any large task or project is to break it up into manageable chunks. In PRINCE2 we refer to the manageable parts as stages. Actually they are called Management Stages.
A PRINCE2 Project is planned, monitored and controlled on a stage-by-stage basis. These stages are referred to as Management Stages, as they are separated by Decision Points (also known as “Control Points”) by the Project Board.
At the end of each stage, the Project Board assesses the performance of the last stage, the Business Case, the plan for next stage, and decides whether to proceed with the next stage.
The Project Board has greater control over the project when the number of stages is high, but this also gives them more work. Fewer stages in a project indicate that the Senior Management will have less control and a lesser amount of work for the Project Board.
Let us look at some of the advantages of stages. Stages provide a good approach to project planning, as they:
- Allow the project to be divided into a number of manageable chunks
- Have a high-level Project Plan for the whole project and a very detailed plan for the current stage
- Make sure that the plans for future stages can also learn from previous stages . For example, if one team delivers their products quicker than expected, then this can be taken into account when creating the plan for the next stage.
There are a minimum of two management stages in a project: The Initiation Stage and one further Management Stage. The Close a Project Process is part of the 2nd Stage in a two-stage project.
PRINCE2 7 Principles: Manage by Exception
This is a term that people who are new to PRINCE2 will most likely not have heard before. Because you must understand it, I will start with a simple explanation and then give you the PRINCE2 definition.
The Project Manager has some tolerance to play with, when it comes to factors like time, cost, and scope, before they have to advise the Project Board that there is or might be a problem (e.g., cost can change ±10%).
If the problem is small and it remains within the tolerances (e.g., the costs increase by 2% — less than the 10% tolerance), then the Project Manager can deal with it and doesn’t have to alert the Project Board and take up their time. Manage by Exception is used by each level in the Project Organization to manage the level below.
The layer below should only notify the above management layer if there is a big issue that is outside their tolerance. The PRINCE2 name for a big issue which means the issue is outside the agreed tolerance is Exception.
Now imagine you are sitting on the Project Board. If everything is going OK, you won’t hear from the Project Manager except for the regular reports during a stage and at the end of the stage, unless there is an exception, hence the term Manage by Exception.
The PRINCE2 definition for Manage by Exception is as follows:
A PRINCE2 project has defined tolerances for each project objective to establish limits of delegated authority.
PRINCE2 lists 7 tolerances that can be set. These are Time, Cost, Quality, Scope, Risk, Sustainability and Benefit.
I will give examples only for Quality, Scope, Risk and Benefit, as Time and Cost are easier to understand.
- Tolerance Quality: You are creating a new GSM and you want the keyboard to work for an average user for 7 years but you have a tolerance of ±5%
- Tolerance Scope: The requirements for a new GSM will have mandatory requirements plus ‘nice to have’ requirements. So the project can decide which ‘nice to have’ requirements to include, but must include the mandatory requirements
- Tolerance Benefit: A Benefit is a measurable improvement resulting from the project for one or more of the stakeholders. These are benefits for the project stakeholders. For example, increase marketing share by 5%, or create a new profitable market segment. One question asked throughout the project is: Is the project still on track to meet the expected benefits?
- Tolerance Risk: Again, I’ll use the example of the GSM. There will be a set tolerance level for risk and if you hear of something that is above this level then you will notify the Project Board. For example, you find out that the risk is now very high -that one of the providers cannot supply a 5 megapixel camera with the correct integration specifications. This can cause many issues for your project.
- Sustainability tolerance. The permissible deviation in the sustainability performance targets that is allowed before the deviation needs to be escalated to the next level of management. Sustainability tolerance is documented in the business case
To summarize, Manage by Exception provides the above management layer with a system to manage and control the lower management layer and they don’t need to be annoyed by each small issue.
PRINCE2 7 Principles: Focus on Products
You can imagine what happens when a product is not correctly described. All project stakeholders can have different ideas on what the product should be. This can cause many unnecessary meetings; time delays, unnecessary new requirements, misunderstanding of the quality required, additional costs and even an end product being produced that is of no use to anybody.
A detailed Product Description will guide the project, build correct expectations and help to the deliver the required products. The PRINCE2 manual states the following: A PRINCE2 project focuses on the definition and delivery of products, in particular, their quality requirements.
Good Product Descriptions provides clarity, as it defines the product’s purpose, composition, derivation, format, quality criteria and quality method. Good Product Descriptions also make it easier to determine resource requirements, dependencies and activities.
PRINCE2 7 Principles: Tailor to suit the Project
A PRINCE2 project should be tailored to suit the project’s size, environment, complexity, importance, capability and risk. If your project is a small one, such as to host a workshop with 10 people, or a very large one, like building a nuclear power plant, then you should tailor PRINCE2 to suit the project, as PRINCE2 can be applied to any type of project.
One criticism most project methods often get is that, “We don’t need a Project Method. Our projects are not that big and a project method will add a lot of unnecessary paperwork to each project”.
This would happen if you try to follow PRINCE2 like a robot. But that is not the way to use PRINCE2. I often use the popular TV program, The Apprentice, as an example. This is usually a 2-day project where 2 teams compete with each other and each team has a Project Manager. You can see that PRINCE2 can be used by each Project Manager and the paperwork can be just a checklist with some notes.
You can also see that most Project Managers keep making the same mistakes week after week. This shows that they don’t understand the principle of Learn from Experience or Lessons Learned.
The purpose of tailoring is to:
- Ensure that the Project Method relates to the project’s environment (i.e., if working in a financial environment, then align it with the existing management structure)
- Ensure that the project’s controls are based on the project’s scale complexity, importance, capability and risk. (e.g., if there is a lot of risk in your project environment, then more time should be spent on dealing with Risk).
The Project Initiation document should describe how the PRINCE2 method is tailored for that particular project.
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