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3PrinciplesThis chapter covers: why PRINCE2 is based on principles the flexibility of a principle-based approach the seven PRINCE2 principles19
Chapter 3 – Principles3PrinciplesPRINCE2 is designed so that it can be applied to any type of project, taking account of its scale, organization,geography and culture. It is designed to contribute to the success of a project without burdening it withbureaucracy. The themes, processes and product descriptions describe what should be done but, in general,not how.PRINCE2 is principle-based rather than prescriptive; the principles are: universal in that they apply to every project self-validating in that they have been proven in practice over many years empowering because they give practitioners of the method added confidence and ability to influence andshape how the project will be managed.The PRINCE2 principles provide a framework of good practice for people involved in a project and weredeveloped from lessons taken from both successful and failed projects.The seven PRINCE2 principles are: continued business justification learn from experience defined roles and responsibilities manage by stages manage by exception focus on products tailor to suit the project.To be following PRINCE2, these principles must be adopted when managing a project. Minimum requirements set outin the themes and processes chapters must also be satisfied. These minimum requirements describe whathas to be done, rather than how it is done.3.1Continued business justificationKey messageA PRINCE2 project has continued business justification.20
PRINCE2 requires that for all projects: there is a justifiable reason for starting the project that justification is recorded and approved the justification remains valid, and is revalidated, throughout the life of the project.The business justification drives decision-making to ensure that the project remains aligned with the benefitsbeing sought that contribute to the business objectives. Organizations that lack rigour in business justificationmay find that projects proceed even when there are few real benefits or when a project has only tentativeassociations with the corporate, programme management or customer strategies. Poor alignment with corporate,programme management or customer strategies can also result in organizations having a portfolio of projectsthat have mutually inconsistent or duplicated objectives.Projects driven by legislation or regulation, which are compulsory, should be supported by a businessjustification to demonstrate that the chosen option represents the best value for money.Although the justification should remain valid, it may change. It is therefore important that the project andevolving justification remain consistent. If a project can no longer be justified then it should be stopped.Stopping a project in these circumstances is a positive contribution to an organization as its funds andresources can be reinvested in other more worthwhile projects.3.2Learn from experienceKey messagePRINCE2 project teams learn from experience: lessons are sought, recorded and acted upon throughoutthe life of the project.Projects involve a temporary organization for a finite timescale for a specific business purpose. A commoncharacteristic is that the project includes an element of uniqueness such that it cannot be managed by existingline management or functional units. It is this element of uniqueness that makes projects challenging as thetemporary team may not have experience of a project like the one being undertaken.Learning from experience takes place throughout PRINCE2: When starting a project Previous or similar projects should be reviewed to see if lessons could be applied.If the project is a ‘first’ for the people within the organization, then it is even more important to learn fromothers and the project should consider seeking external experience. As the project progresses The project should continue to learn. Lessons should be included in relevant reportsand reviews. The goal is to seek opportunities to implement improvements during the life of the project.21Chapter 3 – PrinciplesIn most organizations the business justification is usually documented in some form of business case. Someorganizations may use business plans or similar as the business justification during the early stages of theproject, although these plans may not satisfy the requirements of a business case. The format and formality ofdocumentation might vary, depending on organizational standards, needs and circumstances.
Managing Successful Projects with PRINCE2 As the project closes The project should pass on lessons. Unless lessons provoke change, they are onlylessons identified (not learned).It is the responsibility of everyone involved with the project to look for lessons rather than wait for someone elseto provide them.Chapter 3 – Principles3.3Defined roles and responsibilitiesKey messageA PRINCE2 project has defined and agreed roles and responsibilities within an organization structure thatengages the business, user and supplier stakeholder interests.Projects involve people. No amount of scheduling or control will help if the wrong people are involved, if the rightpeople are not involved, or if people involved do not know what is expected of them or what to expect of others.A project is typically cross-functional, may involve more than one organization, and may involve a mix offull-time and part-time resources. The management structures of the parties involved in the project are likely tobe different with different priorities, objectives and interests to protect. The day-to-day line managementstructures may not be designed for, or suited to, project work.To be successful, projects must have an explicit project management team structure consisting of defined andagreed roles and responsibilities for the people involved in the project and a means for effective communicationbetween them.All projects have the following primary stakeholders: ‘business’ sponsors who endorse the objectives and ensure that the business investment provides valuefor money ‘users’ who, after the project is completed, will use the products to enable the organization to gain theexpected benefits ‘suppliers’ who provide the resources and expertise required by the project (these may be internal or external).Therefore, all three stakeholder interests need to be represented effectively in the project management team;two out of three is not enough. If the project costs outweigh the benefits, the project will be seen as a failure.Equally, if the outcome of the project does not meet the users’ or operational needs, or cannot feasibly bedelivered by the suppliers, failure is inevitable. The stakeholder interests are represented on the project board(see section 7.2.1.1).The defined project management team structure unites the various parties in the common aims of the project.For all those people involved, a defined project management team structure provides the answer to thequestion: What is expected of me?22
Principles3.4Manage by stagesChapter 3 – PrinciplesKey messageA PRINCE2 project is planned, monitored and controlled, management stage by management stage.PRINCE2 breaks the project down into discrete, sequential sections, called management stages.Definition: Management stageThe section of a project that the project manager is managing on behalf of the project board at any onetime, at the end of which the project board will wish to review progress to date, the state of the projectplan, the business case and risks and the next stage plan, in order to decide whether to continue withthe project.The choice of appropriate management stages for a project will depend on a number of factors, including: the size and complexity of the project (e.g. shorter management stages offer more control, whereas longermanagement stages reduce the burden on senior management) significant decisions and control points required during the project’s lifecycle; these will often be linked tokey investment, business or technical decisions organizational policies and standards.In PRINCE2, a project must have at least two management stages: an initiation stage at least one further management stage. The more complex and risky a project is, the more managementstages will be required.The focus on managing by stages ensures that the project is properly initiated before work starts on delivery ofthe project’s outputs. It also: provides review and decision points, giving the project board the opportunity to assess the project’s viabilityat defined intervals, rather than let it run on in an uncontrolled manner gives the ability to ensure that key decisions are made prior to the detailed work needed to implement them allows clarification of what the impact will be of an identified external influence, such as the corporatebudget-setting process or the finalization of legislation facilitates the manage by exception principle by delegating authority to the project manager managementstage by management stage.23
Managing Successful Projects with PRINCE2 Chapter 3 – PrinciplesThe project board authorizes one management stage of the project at a time. Towards the end of eachmanagement stage (other than the final one) the project manager will review the business case and project plan,update the project documentation with the results of the stage, and create an end stage report and stage planto request authorization to commence the next management stage. The end stage report, together with thestage plan for the next management stage, should contain all the information necessary to enable the projectboard to conduct an end stage assessment and make a decision as to whether to proceed.The project board only authorizes the next management stage if there is sufficient business justification tocontinue. If the project no longer has a valid business case, and the project board has been delegated theappropriate authority, it will prematurely close the project. Without this authority, the project board will escalateits recommendation for closure to the corporate, programme management or customer decision makers.Key messageThe project board delegates the authority for day-to-day control of a management stage, within agreedtolerances, to the project manager.As long as the management stage is forecast to remain within tolerance, the project manager has discretion tomake adjustments as required. This allows the project board to manage by exception, retaining the level ofcontrol it requires while reducing the administrative overhead of being involved.3.5Manage by exceptionKey messageA PRINCE2 project has defined tolerances for each project objective, to establish limits ofdelegated authority.PRINCE2 enables appropriate governance by defining distinct responsibilities for directing, managing anddelivering the project and clearly defining accountability at each level. Accountability is established by: Delegating authority from one management level to the next by setting tolerances against six aspects ofperformance for the respective level of the plan: Cost The degree of permissible overspend or underspend against an agreed budget Time The degree to which a project is permitted to deliver later or earlier than an agreed targetcompletion date Quality How much something can vary from agreed quality criteria. For example, a project to produce anew sports watch might have a target that the watch should work under water to a depth of 50 metres,with a permissible tolerance of plus or minus 5 metres24
Principles Scope Permissible variation of the plan’s products. For example, a project might be required to deliver allof the must do, ‘mandatory’ requirements but be permitted to deliver only 50 per cent or more of itsshould do, ‘desirable’ requirements Benefits The degree to which it is permissible to under-deliver or over-deliver benefits (realized or Risk Limits on the plan’s aggregated risks. For example, a tolerance might be set that the cost ofaggregated threats must remain less than 10 per cent of the budget and that the cost of any single threatmust be no more than 5 per cent of the agreed budget. Setting up controls so that if those tolerances are forecast to be exceeded, they are described as being inexception and immediately escalated to the next management level for a decision on how to proceed. Putting an assurance mechanism in place so that each management level can be confident that suchcontrols are effective.This implementation of ‘manage by exception’ provides for very efficient use of senior management time as itreduces senior managers’ time burden without removing their control by ensuring decisions are made at theright level in the organization.3.6Focus on productsKey messageA PRINCE2 project focuses on the definition and delivery of products, in particular their quality requirements.Projects that focus on what the project needs to produce are generally more successful than projects whoseprimary focus is the work activity. This is because the purpose of a project is to fulfil stakeholder expectationsin accordance with the business justification, and to do this there must be a common understanding of theproducts required and the quality expectations for them. The purpose of a project can be interpreted in manydifferent ways unless there is an explicit understanding of the products to be produced and the criteria againstwhich they will be individually approved.Under the principle of focus on products, PRINCE2 requires projects to be output oriented rather than workoriented. PRINCE2 calls these outputs ‘products’.Definition: ProductAn input or output, whether tangible or intangible, that can be described in advance, created and tested.PRINCE2 has two types of products: management products and specialist products.25Chapter 3 – Principlesestimated). For example, the business case for a sales improvement project might have been modelledwith a plus or minus 2 per cent range of increased income generation
Managing Successful Projects with PRINCE2 An output-oriented project is one that agrees and defines the project product prior to undertaking the activitiesrequired to produce it. The set of agreed products defines the scope of a project and provides the basis forplanning and control.Chapter 3 – PrinciplesKey messageThe guidance uses the terms ‘output’ and ‘deliverable’ synonymously with the term ‘product’. ‘Projectproduct’ is used to describe the output from the project, including its component products, as defined inthe project product description (see section A.21). The term ‘project’s products’ refers to the specialistand management products created during the project.This focus on products: ensures that the project only carries out work that directly contributes to the delivery of a product; that is,the project does no more work than it needs to deliver its agreed products helps manage uncontrolled change (‘scope creep’) by ensuring that all changes are agreed in terms of howthey will impact project products and the business justification for the project reduces the risk of user dissatisfaction and acceptance disputes by agreeing, at the start, what will beproduced by the project.A PRINCE2 project uses product descriptions to provide such clarity by defining each product’s purpose,composition, derivation, format, quality criteria and quality method. They provide the means to determine effortestimates, resource requirements, dependencies and activity schedules.TipProjects using an agile delivery approach will initially focus on the purpose, derivation and quality criteriaof the project product to deliver the initial features. More detail about the composition and format willemerge as the product evolves and progresses to its final state.The focus on products supports almost every aspect of PRINCE2: planning, responsibilities, status reporting,quality, change control, scope, product acceptance and risk management.26
Principles3.7Tailor to suit the projectPRINCE2 is tailored to suit the project environment, size, complexity, importance, team capability and risk.The value of PRINCE2 is that it is a universal project management method that can be applied to take accountof the project’s environment, size, complexity, importance, team capability and risk, and can be used for anyproject type, geography or culture. It can be used on any project because the method is designed to be tailoredto suit each project’s specific needs and context.The purpose of tailoring is to ensure that: the project management method used is appropriate to the project (e.g. aligning the method with thebusiness processes that may govern and support the project, such as human resources, finance andprocurement) project controls are appropriate to the project’s scale, complexity, importance, team capability and risk (e.g.the frequency and formality of reports and reviews).Tailoring requires the project board and the project manager to make proactive choices and decisions on howPRINCE2 will be applied. When tailoring PRINCE2, it is important to remember that effective projectmanagement requires information (not necessarily documents) and decisions (not necessarily meetings).The PID should describe how PRINCE2 has been tailored for that particular project so that all those involved onthe project understand how PRINCE2 is to be used and how to carry out their particular responsibilities.If PRINCE2 is not tailored, it is unlikely that the project management effort and approach would be appropriatefor the needs of the project. This can lead to ‘mechanistic’ project management at one extreme (a method isfollowed without question) or ‘heroic’ project management at the other extreme (a method is not followed at all).27Chapter 3 – PrinciplesKey message
Managing Successful Projects with PRINCE2 Chapter 3 – Principles! As the project closes The project should pass on lessons. Unless lessons provoke change, they are only lessons identified (not learned). It is the responsibility of everyone involved with the project to look for l
