What is PRINCE2?
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PRINCE2 is a project management method that can be used for any project, from running a 1 day event to building a nuclear power plant. PRINCE2 is widely recognised (#1 project management certification) can be used in both the public and private sectors. The PRINCE2 method is in the public domain therefore it is free to use and it also offers non-proprietorial best practice guidance on project management.
Some key features of PRINCE2 are:
- The focus of the project is on business justification and potential long term value
- Defined organisation structure for the project management team so people know what is expected from them
- Product-based planning approach (product breakdown structure and good product descriptions)
- Emphasis on dividing the project into manageable and controllable stages making the project easier to plan and control
- And that PRINCE2 can be tailored to suit the project environment and minimise the amount of paperwork.
History of PRINCE2
The following is a timeline of PRINCE2 and its origins:
- mid-1970s: PROMPT Methodology created in Simpact Systems Limited (a private sector company). PROMPT stands for Project, Resource, Organization, Management, and Planning Technique.
- early 1980s: CCTA (Central Computer and Telecommunications Agency in the UK) licenses the PROMPT Methodology.
- 1989: CCTA enhances PROMPT and renames it into PRINCE. PRINCE stands for PROMPT in the CCTA Environment.
- 1996: The first release of PRINCE2, and its certifications
- 2000: CCTA was integrated into OGC (Office of Government Commerce).
- 2009: Latest release of PRINCE2
- 2013: the ownership of PRINCE2 was transformed to AXELOS
Benefits of using PRINCE2
There are numerous advantages to using PRINCE2 (like most methods):
- Best practice: PRINCE2 has been around more than 40 years in many thousands of projects, and it learns from these projects.
- PRINCE2 can be used for all kinds of projects
- PRINCE2 provides a structure for roles and accountability meaning that all should know what is expected of them and what they can expect from others.
- PRINCE2 is product-focused, meaning that products are well-defined before work begins.
- PRINCE2 uses Management by Exception. This allows each layer to get on with their work and only escalate if needed. More on this later.
- PRINCE2 assess the viability of the project from a business case from start to finish.
PRINCE2 project variables
The two most common variables to control in a project are time and cost. There are 6 variables (performance targets) to control in a project and these are: Timescales, Costs, Quality, Scope, Benefits, and Risk. Also known as: 6 aspects of project performance. Tip to remember them: Use TeCQuila SoBeR. This will give you Timescales, Costs, Quality, Scope, Benefits, and Risk. Or you can use: “BC QRST.”
- Time: When will the project be finished?
- Cost: Projects need to give a return on investment and costs need to be controlled.
- Quality: Are products passing their quality checks and will users be able to use the project product as expected when delivered
- Scope: Is the scope clear to all stakeholders? The first scope document is the PPD
- Benefits: Expected benefits must be known, agreed and measurable.
- Risk: All projects have risk, so risk needs to be managed so the project has a better chance to succeed.
There are many project definitions and its best to read them all to get a better of the PRINCE2 definition.
- Here is one from Wikipedia: A project is a unique series of actions designed to accomplish a unique goal within specific time and cost limitations.
- Source internet: An individual or collaborative enterprise that is carefully planned to achieve a particular aim
- Another one: A project is an activity to meet the creation of a unique product or service and thus activities that are undertaken to accomplish routine activities cannot be considered projects.
PRINCE2 project definition: A project is a temporary organization that is created for the purpose of delivering one or more business products according to an agreed business case.
- The word organization refers to the project team (people involved in the project)
- The word temporary refers to the fact that each project as a definite start and end date.
- The business case includes: reasons for the project, expected benefits, costs and time
Principle 1: Continued business justification
A PRINCE2 project must have business justification; therefore, each project should have a business case that shows that the project is value for money. So, there must be a business reason to start and continue with a project and there must be a clear Return on Investment.
“Does the project have business justification?” = “Does the project have a valid business case?”
If at any time during the project, the expected Return on Investment 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 information is also referred to as the business justification information. The business justification is checked throughout the lifetime of the project. E.g., at the end of each stage.
Principle 2: Learn from experience
PRINCE2 projects should learn from previous projects and should take the necessary initiative to uncover lessons from previous projects and experience and take these into. It is the responsibility of everyone involved with the project to seek lessons and the PM should remind everyone.
Projects are unique, meaning that there is always something new and therefore all project can learn from other people. “Learn from experience” covers the full lifetime of the project, from the SU to the CP process. All lessons learned during the project should be documented and these should be passed on, so they are available for future projects. The project board should also ask for proof that the project is learning from lessons.
Principle 3: Defined roles and responsibilities
In any project, people need to know what is expected from them and what they can expect from others. A PRINCE2 project should have defined and agreed roles and responsibilities. Each project should have a clear team structure and this needs to be known and accepted.
A PRINCE2 project has 3 primary stakeholders:
- Business sponsors: They mace sure that the project delivers value for money (Executive)
- Users: They will use the project products and receive the benefits.
- Suppliers: They provide the resources and expertise to produce the products.
These 3 primary stakeholders must be represented in the project management team description and in the project board. So, this principle answers the questions “What is expected of me?”, “What can I expect from others?” and “Who makes what decisions?”
Principle 4: Manage by stages
How do you eat an elephant? one bite at a time (this is just an expression). How do you do a large project? one stage (chunk) at a time. PRINCE2 refers to these chunks as stages (management stages). A PRINCE2 project should be planned, monitored, and controlled on a stage-by-stage basis and each stage is separated by a project board decision.
At the end of each stage, the project board should assess the performance of the last stage by reading the end project reports and checking the business case and stage plan for the next stage. They will then decide to proceed to the next stage or stop the project.
If the project board wish to have more control over the project, they increase the number of stages, so they have more control points and more work. Some advantages of stages are:
- Allow the project to be divided into pieces which are easier to manage
- Have a very detailed stage plan and a high-level project plan for the whole project
- Use lessons from previous stages in future stages
Principle 5: Manage by exception
Each layer (CPC, direction, management) wishes to manage the level below them but still give them some room to work and make decisions and manage by exception is used for this. The layer below gets on with their work and notifies the above layer if there is a big issue (exception) that is outside their tolerance. So, an Exception is a big issue that takes a level out of their agreed tolerance.
Imagine you are sitting on the project board and of all is going OK with the PM you will just get normal reports. If the PM hits a big issue, then they will contact the project board immediately as this big issue is an exception. The definition for Manage by Exception is: A PRINCE2 project has defined tolerances for each project objective to establish limits of delegated authority.
PRINCE2 lists 6 tolerances that can be set. Time, Cost, Quality, Scope, Risk, and Benefits. Both time and cost are easy to understand so I will just comment on the other four.
- Tolerance quality: e.g. Power button on smartphone to work for 10 with a tolerance of ±5%.
- Tolerance scope: Projects can use MoSCoW to decide on scope
- Tolerance benefits: These are benefits for the project stakeholders.
- Tolerance risk: Risks can be assigned values and can be escalated if > a certain value.
Manage by Exception provides the above management layer with a system to manage and control the lower management layer.
Principle 6: Focus on products
If a product requirements are not correctly defined, then all project stakeholders can have a different idea on what the product should be. This will cause a lot of issues during the project and most likely produce an end product that cannot be used.
Detailed product descriptions of the products will help build correct expectations and make life easy for the teams who deliver the products. A PRINCE2 project should focus on the definition and delivery of products, in particular, their quality requirements.
A detailed product description also makes it easier for the team managers to determine resource requirements, dependencies, and activities. The focus on products principle states that a product description with quality requirements should be written as soon and as clearly as possible.
Principle 7: Tailoring or tailor to suit the project environment
No projects are 100% the same and each PRINCE2 project should be tailored to suit the project’s size, environment, complexity, importance, capability, and risk.
The purpose of tailoring is to:
- Ensure that the project method is project’s environment into account. (i.e., if working in a financial environment, then align it with the existing management structure).
- Ensure with the project board that the project’s controls are based on the project’s scale, complexity, importance, capability, and risk.
Themes are knowledge areas; they are the parts of the project that need to be continually addressed throughout the project lifecycle. Each theme provides knowledge (how to go about) on a specific area of project management, such as the business case, planning, quality, risk, etc.
Themes should also be tailored to suit the project and only use what is required to do the project. This will of course depend on the project and the environment you are working in. For example, if you are building a lunar module, then quality and risks themes would be used in detail.
The PRINCE2 processes address the flow of the project, in other words, the processes guide you through the typical activities that you need to do to run a project.
- Business case: Why? ROI? Benefits?
- Organization: Who? Responsibilities?
- Quality: Level of quality for each product characteristic?
- Plans: How? How much? When? What (Product description)?
- Risk: What if X happens?
- Change: How to deal with changes requests and issues?
- Progress: Where are we now compared to the plan, show progress
All 7 themes should be tailored according to the risk, scale, nature, complexity, or simplicity of the project so. Each PRINCE2 theme specifies minimum requirements for each theme. Note: Tailoring is covered in the PRINCE2 Practitioner syllabus, so you don’t need to know much (this is all) more about tailoring the themes for the Foundation syllabus.
Theme 1: Business Case
The business case theme provides information to help the project make better decisions regarding the business case. The purpose of the business case theme is “to provide a structure to judge whether the business case is desirable, viable, and achievable.”
- Desirable: Determine if the output is really required by the users
- Viable: Is it technically possible to deliver this product?
- Achievable: Is it possible to deliver the future benefits?
Business justification means that there should be valid business reason for doing the project and this reason remains valid throughout the project. If the business case becomes, then the project should be shut down. The business case is used to document the business justification.
Theme 2: Organisation
The purpose of the organization theme is to help define and establish the project’s structure of accountability and responsibilities. PRINCE2 states that a project is based on a customer/supplier environment where one party is the customer, who will specify the results and most likely pay for the project (and use the products), and the other party is the supplier, who will provide the resources, do the work, and deliver the required products.
PRINCE2 states that a project team should:
- Have correct business, user, and supplier representation
- Have defined responsibilities for directing, managing, and delivering the project
- Have regular reviews (end of each stage) of the project to check that all is on track
- Have a good communication flow to and from stakeholders
So, each project needs to have direction, management, control, and communication.
Stakeholder: A stakeholder is any person or group that can be affected by the project or can affect the project. This includes the project team, potential users and other persons external to the project as well as those who may be negatively affected.
Theme 3: Quality
The purpose of the quality theme is to setup and implement a system that will create and verify that products are fit for use and meet user requirements. The quality theme defines the PRINCE2 approach to ensure that products created during the project meet the user’s expectations and that the end product can be used as intended, so users can realize the expected benefits.
Product focus is one of the seven principles of PRINCE2, which states that products should be clearly defined (including detailed quality requirements) and signed off before development is allowed to start. Product descriptions must include the quality criteria information so that all project stakeholders have a common understanding of the products that will be created.
For example, if you are creating a new can opener, some of the quality criteria might be:
- Rust free
- Easy to clean
- Plastic handle should keep its color for 30 years
- Mechanical parts must open 35,000 cans
- Easy to use (8 years to 90 years)
Theme 4: Plans
The purpose of the plans theme is to provide a framework to design, develop, and maintain the project plans to help plan, facilitate communication and control the project.
This theme helps to answer the following questions:
- What is required to be delivered?
- How will it be delivered and by whom?
- What is the best approach to creating the products?
- What will the execution steps be?
- How can product-based planning be done?
- What quality has to be reached and how to define this?
- How much will it cost to deliver the products and the project?
- The level of detail required for each plan?
The plans provide the backbone of information used to manage the project. Without a plan, there can be no control as you have no baseline to compare your progress to. The act of planning helps the project PM and the rest of the project management team think ahead and avoid duplication, omissions, threats and other planning issues.
Theme 5: Risk
The purpose of the risk theme is to provide an approach to “identify, assess, and control uncertainty during a project, and as a result, improve the ability of the project to succeed.”
- The PRINCE2 definition for risk is taken from the Management of Risk (MoR) method: Risk is a set of events that, should they occur, will have an effect on achieving the project objectives.
- Another popular definition: Risk is an uncertain event that, if it occurs, will have a positive or negative effect on a project objective.
PRINCE2 states that the project’s objectives which are the 6 performance targets of time, cost, quality, scope, benefits, and risk.
Risk management activities:
Risk management is about actions you take to enable you to identify, assess, and control risk. The PRINCE2 risk theme provides an approach to manage risk in a project. There are 3 steps to risk management, which are Identification, Assessment, and Control:
- Identification: Identify, capture, and describe the risk
- Assess the risk: Likelihood of the risk and impact on objectives
- Respond: How best to respond to a risk and responsibilities
Theme 6: Change
The purpose of the change theme is to help you identify, assess, and control any potential changes to the products that have already been approved and baselined. Change is inevitable in any project, and all projects need a good approach to identify, assess, and control issues. This theme provides an approach to issue and change control.
Issue and change control happens during the full lifecycle of the project. Remember, the objective is not to prevent changes but to get changes agreed and approved before they are executed.
Each project requires a configuration management system that tracks products, records when products are approved and baselined, and helps to ensure that the correct versions are being used.
- Issues: PRINCE2 uses the term issue to cover any relevant event that has happened that was not planned and that requires some management action (for example, a question or a change request). Issues can be raised at any time during the project and by anyone.
- Configuration management is the technical and administrative activity concerned with the creation, maintenance, and controlled change of the configuration of a product.
- Configuration item: A configuration item is the name given to an entity (or item) that is managed by configuration management. E.g. Laptop PC, business case document, code, demo version… You could also say that a configuration item is anything that you want to track during the project.
- Baseline: A point of time for a product against which the product is monitored and controlled. E.g., after a product description is agreed, we want no unauthorized changes so we lock (e.g., print to PDF) and date the document, which is the same as baselining the document. If the product description is updated, then a new baseline product description is created.
- Release: A release is a complete and consistent set of products that are managed, tested, and deployed as a single entity. E.g. New OS & apps on your SmartPhone
- Product status account: This is a simple report on the status of products. E.g., at the end of the stage, you query the CMDB and ask for a status of all products for stage 2.
Theme 7: Progress
The purpose of the progress theme is to:
- establish how to monitor and compare actual achievements against those planned
- provide a forecast for the project objectives and continued viability
- be able to control any unacceptable deviations
Progress is about checking progress compared to the plans and controlling any deviations. Project control involves measuring actual progress against the 6 performance targets of time, costs, quality, scope, benefits, and risk. Progress can be monitored at 3 levels:
- Project level (project board)
- Stage level (project manager)
- Work package level (team manager)
Progress is checking and controlling where you are compared to the plan and this is done for the project level, stage level, and work package level. Progress control involves the activities of measuring actual progress against the performance targets and each project layer wishes to monitor the layer below. Each layer does the following:
- Monitor actual progress against the plan (review plans with forecast)
- Detect problems and identify risks
- Initiate corrective action to fix issues
- Authorize further work to be done
An exception is a situation where it can be forecast that there will be a deviation beyond the agreed tolerance levels.
Tolerances are the deviation above and below a plan’s target. For example, the project should take 6 months, with a tolerance of ±1 month. Tolerance levels could also be set for all 6 tolerance areas.
A process is a structured set of activities designed to accomplish a specific objective. has activities for Starting Up a Project, running a project, and many others. It groups these into processes.
is a process-based approach for project management. There are 7 processes that guide you through the project, and each provides a set of activities. These activities help to direct, manage and deliver a project, and are described in the manual. Like any process, a process takes one or more inputs, acts on them, and provides defined outputs.
Process 1: Starting up a project
The main purpose of this process is to ask the question: “Do we have a worthwhile and viable project?” and prevent poor projects from starting up. This question should be asked for each project idea and then briefly documented (project brief).
Typical questions can be:
- How risky is this project compare to other projects?
- What is the ROI on this project?
- How does it support the organization strategy in the next years?
Objectives of the SU process:
- To ensure that: there is a business justification for initiating the project (outline business case)
- What is the best way of doing this project? (known as project approach)
- Why do we need in the project? (starting with executive and PM)
- What is the project going to create (deliver)? Document in the PPD (1 to 3 pages)
- Plan the next initiation stage where all the detailed planning will be done
Process 2: Initiating a project
The purpose of the IP process is to establish a solid foundation (documented in the PID) for the project so the organization can understand the work that needs to be done to deliver the required product.
Objectives of the IP process: The objectives of the IP process are to ensure there is a shared understanding of:
- the reasons for doing the project
- the scope: what is to be done and what will not be included (project plan)
- how and when the products will be delivered (project plan)
- how the required quality will be achieved?
- how baselines will be established and controlled
- how risks, issues, and changes will be identified and followed up
- how project progress will be monitored and who needs to be informed and how often
- how PRINCE2 will be tailored to suit the project
Process 3: Directing a project
Purpose: The purpose of this process is to enable the project board to be accountable for the project. They will make key decisions, have overall control and to delegate day-to-day management to the PM.
Objectives: The objectives of the directing a project process are to provide authority (project board):
- To initiate the project (allow the initiation stage to start which is the first decision)
- To deliver the project’s products (this is done in the delivery stages)
- To close the project which is the last decision by the project board
Other objectives are to:
- Provide direction and control during the project and be interface to the CPC
- Ensure that post-project benefits will be reviewed (see that meetings are planned)
Process 4: Controlling a stage
Purpose: The purpose of this CS process is for the PM to assign the work to be done, monitor this work, deal with issues, report progress to the project board, and take corrective action to ensure that the stage remains within tolerance.
Objectives: The objectives of the controlling a stage process are to:
- Ensure that attention is focused on the delivery of the products
- Keep risks and issues under control
- Keep the business case under review (ask is the project still viable)
- Deliver the products for the stage to the agreed quality within agreed cost and time.
Process 5: Managing product delivery
Purpose: The purpose of the MP process is to control the link between the project manager and the team manager(s) by agreeing on the requirements for acceptance, execution, and delivery.
- Products assigned to the team are authorized and agreed on (work packages)
- The team is clear about what has to be produced and understands effort, time, and cost
- Planned products are delivered to the quality expectations and within tolerance
- Accurate progress information is provided by the team manager
The managing product delivery process views the project from the team manager’s point of view:
- Accepting a work package: The team manager accepts the work package
- Executing a work package: The team produces the products, requests the quality checks, obtains approval, and reports to the PM using regular checkpoint reports.
- Delivering a work package: This is showing proof that the products are complete.
Process 6: Managing a stage boundary
Purpose: The purpose of managing a stage boundary process has two parts:
- The PM must provide the project board with an overview of the performance of the current stage, update the project plan, business case, and create a stage plan for the next stage.
- The project board reviews these documents and decide to approve the next stage.
- Assure that all products in the current stage are produced and approved
- Review and update the usual documents (business case, project plan)
- Record lessons in the lessons log that can help in later stages or in future projects
- Prepare the stage plan for the next stage and the request authorization to start the next stage
- Plan next stage: Create the next stage plan
- Update the project plan: Confirm what has been done (actuals)
- Update the business case: Update with the latest cost information
- Report stage end: Create the end stage report
- Option: If exception then produce an exception plan (to replace current plan)
Principle 7: Closing a project
The purpose of the CP process is to provide a fixed point to check that the project has reached its objectives and that the products have been accepted by the customer.
- Verify user acceptance of the project’s products (delivered by the project)
- Ensure that products can be supported after the project
- Review the performance of the project
- Assess the benefits already realized and plan post project reviews
- Address open issues and risks with a follow-up on action recommendations
The project board close the project and the project manager only prepares the project for closure.
Closing a project activities:
- Prepare planned closure: Confirm the completion and acceptance of the products
- Prepare premature closure: Only if requested by the project board (optional)
- Hand over products: This is described in the change control approach
- Evaluate the project: Compare project objectives and write end project report.
- Recommend project closure: Send a notification to the project board
There are two levels of certification for PRINCE2, Foundation and Practitioner.
PRINCE2 Foundation Certification
The aim of the PRINCE2 Foundation level aims to measure whether a candidate would be able to act a member of a PRINCE2 project management team. Therefore they need to show they understand the principles and terminology of the method and be able to:
- Describe the purpose and major content of all roles, the seven principles, the seven themes and the seven processes.
- State which management products are input to, and output from the seven processes.
- State the main purpose, and key contents, of the major management products.
- State the relationships between processes, deliverables, roles and the management dimensions of a project.
- 60 minute exam duration
- 60 questions
- Closed book
- 33/60 required to pass = 55% pass mark
There’s also a full article about the PRINCE2 Foundation exam.
PRINCE2 Practitioner Certification
The PRINCE2 Practitioner level is aiming to measure whether a candidate could apply PRINCE2 to the running and managing of a non-complex project within an environment supporting PRINCE2. Therefore they need to show that they can apply and tailor PRINCE2 to address the needs and problems of a given project scenario eg:
- Produce detailed explanations of all principles, themes and processes and worked examples of all PRINCE2 products as they might be applied to address the particular circumstances of a given project scenario
- Show they understand the relationships between principles, themes and processes and PRINCE2 products and can apply this understanding
- Demonstrate that they understand the reasons behind the principles, themes and processes of PRINCE2, and that they understand the principles underpinning these elements
- Demonstrate their ability to tune PRINCE2 to different project circumstances.
- 150 minute exam duration
- 68 questions
- 38/68 required to pass = 55% pass mark
- Open book exam (official PRINCE2 manual only)
In order to sit the PRINCE2 Practitioner exam you must be able to provide proof of passing one of the following exams:
- PRINCE2 Foundation
- Project Management Professional (PMP)
- Certified Associate in Project Management (CAPM)
- IPMA Level A (Certified Projects Director)
- IPMA Level B (Certified Senior Project Manager)
- IPMA Level C (Certified Project Manager)
- IPMA Level D (Certified Project Management Associate)
There’s also a full article about the PRINCE2 Practitioner exam.