Cost of Change in Projects

00:02 To really drum in the importance of planning.

00:05 In case you haven't been listening, this lesson is going to look at the cost of change. Let's take this back to our project and jump into your project manager shoes.

00:17 Say You've planned for our showroom to be finished by the end of August.

00:22 But when July comes around, Lamborarri decide they want to add an additional floor. It's clear that construction won't be complete now until at least October, maybe longer, due to bad autumn weather.

00:36 The additional budget time, resources and coordination efforts that are required to adjust for the change are the cost.

00:45 Remember our trio of constraints.

00:47 If one change occurs and affects one of our constraints, they will all be affected. And what's more, when the change is needed makes a great difference. If a change occurs later in the project, you can safely bet your holiday savings fund that the impact will be much worse than if it had happened at an earlier stage.

01:08 If this decision had been made earlier, before construction had started and the weather was better, the cost would be much lower.

01:16 Take a look at the following graph.

01:22 As the time passes and the project progresses from initiation through planning and execution, the cost of change increases.

01:29 Simple enough. But in case you're not much of a graph person, let's look at an example to imagine a project where a company aims to start making yo yos that double as Bluetooth speakers.

01:44 Then at some point top management decides that yo yos aren't cool anymore and wants to make Diablos instead.

01:52 If this decision is made early in the project, you can imagine the impact will not be too devastating.

01:58 But think of this happened after all the yo yo making machines had been bought.

02:03 There's a good chance the project wouldn't even survive a change like that.

02:08 You can imagine that expectations of stakeholders and scope are very important during the planning stage, and if the project manager doesn't cover everything in their plan, then things can go very wrong.

02:21 That's why a project manager will need to plan their plan.

02:27 Yes, that's right.

02:29 See you. Next lesson where we'll show you how and why.