What are Project Tolerances

The relationship between the project sponsor and project manager is a delicate one. As a project manager, you want to make sure that you’re doing the right thing. You need to be able to take responsibility for correcting the course of the project. You want to have freedom of action to be able to steer the team back on track.

But your project sponsor is ultimately responsible for decisions about spending and timelines. So how do you balance needing to make small changes almost every day with the need for your project sponsor to be informed and take those decisions?

The answer is that you don’t.

If you set boundaries for your area of responsibility at the beginning of the project, the sponsor can delegate those small changes to you – even if they involve shifting the dates or spending more money.

This is where tolerances help project managers.

The Benefit of Project Tolerances

Tolerances are the boundaries you set for your behaviour on the project. They define the decisions you can take as a project manager, without having to defer to the sponsor.

Tolerances are useful because they mean you don’t have to continually go back to your project sponsor to ask for permission to complete the project a day late or a few pounds over budget.

Defining your tolerances, and then managing to them, gives you and your sponsor the ability to set criteria around what you can and can’t do on the project.

How to Set Tolerances on a Project

Set and understand your boundaries as early as you can in the project. There are two main elements to doing this.

First, it’s important to know how much latitude you have on your project to make decisions and to shape how the work is done. What does being a project manager mean in your organisation? How much scope do you have to do things your own way?

For example, you don’t want to be in a position where you make a decision not to use a certain tool only to find that this has repercussions downstream for others in the business who rely on that tool for data.

You may not have any ability to change the method used, or how you tailor it to suit your project. Conversely, your sponsor might say that there is plenty of scope to adapt standard templates or make decisions about how to carry out the work.

Discuss the project with your project sponsor (or line manager, in a functional structure) so you know what the constraints are in terms of project management approach.

Second, it’s important to be clear on tolerances specifically for this project. Tolerances are how much you can flex within your project without having to go back for approval, specifically around budget and schedule but you can also set them for other areas.

Here are some examples.

Budget Tolerance

Measured as a percent or fixed sum.

Example: +/- 10%

This means that as long as you are within 10% of your forecasted budget at completion you can carry on. As soon as you are forecasting to spend more than 10% you have to alert your project sponsor.

Schedule Tolerance

Measured as a percent or fixed amount.

Example: +/- 10 days

This means that as long as you are forecasting to complete the project within 10 days of the scheduled end date you can continue without seeking further input. If the forecasted project completion date stretches to more than 10 days after the current baselined schedule date, you need to seek approval from your project sponsor.

Risk Tolerance

Measured as a number of risks with a certain status

Example: No risks requiring sponsor involvement and/or fewer than five risks with ‘Major’ status

This means that as long as there are no risk management actions that need sponsor involvement, or fewer than five risks with the status of ‘Major’, then you have the freedom to continue to manage these within the project as long as they are reported in the monthly project reporting.

The tolerances I mentioned above – budget, schedule and the project risk – are specifically about how you will do project management on the project. They relate to the boundaries you have around how you are managing the work.

You can set tolerances for pretty much any area of project management. They simply define your boundaries and your sphere of operation in that area.

For example, you can also set tolerances for the outputs of a project. If you are launching a new web-based service, you may have tolerances for quality defined in your quality criteria. Here are some examples:

·       Website loads within 0 to 0.7 seconds

·       Website page size is between two and three megabytes

·       Auto password recovery email is sent within one to two seconds.

Monitoring and Controlling

It is important to manage your work so that you know when you are approaching your tolerance limits, and what you should do when that happens. As soon as you know you are going to breach a tolerance, you should escalate this to your project sponsor and let them know.

They will then have to make a decision about the best next course of action, and it may be that you can’t go ahead with the direction you thought was best.

You may also find that from time to time an event occurs that would keep you within your approved tolerance but that you think your sponsor should know about. Professional judgement always trumps arbitrary rules, so if you think you should inform your sponsor of something, then go ahead and do so.

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