Tolerances are a key part of being able work autonomously as project managers. To be able to alter the direction of the work, you must have the ability to exercise your authority and take action.
The project sponsor is responsible for making decisions about the project budget and schedule. Any changes that would affect the agreed plan will be made by the sponsor.
How can you balance the needs of both the sponsor and your desire to make small changes on an ongoing basis with the sponsor’s ultimate role as the final decision-maker regarding changes?
The short answer is no.
Welcome to the wonderful world that is project tolerances.
What is a project tolerance?
What level of management determines project tolerances?
How are tolerances determined?
What tolerances are there for a project?
The 6 Tolerances in PRINCE2(r)Time/Schedule Tolerance
Cost Tolerance
Scope Tolerance
Risk Tolerance
Quality Tolerance
Benefits of Tolerance
The key takeaways
What is a project tolerance?
Tolerance is a range of performance you will adhere to. This is the definition of project tolerance that I use in my book Project Manager.
Tolerances refer to how much you can be flexible within your project without needing approval.
A project tolerance is a limit on the area in which you can make changes to the project without needing to get approval from your sponsor.
They set the boundaries of your responsibility. The sponsor grants you authority to make small changes within a defined range of impact. You can change dates or budgets, but you must not go beyond the zone.
Tolerating means that you can be over or under a certain amount without having to constantly go back to your sponsor to get any variations approved.
It allows you to be professional in how you deliver projects and gives you some flexibility.
What level of management determines project tolerances?
Tolerances can also be set for each stage of the project and for each work package. This allows them to become very specific.
At the beginning of the project, you should agree on the overall project tolerances with the sponsor so that you know the parameters you are working within.
These forms are part of the “contract” you have with the sponsor. Being clear about this upfront will make managing the project (and your sponsor) much easier as the project progresses.
How are tolerances determined?
Talk to your sponsor. Talk to your sponsor about how much wiggle space you believe is appropriate. Start with +/-10% of the timeframes already agreed upon.
They might be willing to accept a lower budget tolerance: I have found that project sponsors are not keen to spend 10% more than budget and not know it.
What tolerances are there for a project?
Positive tolerances (the limit of what you can do) are the most common.
A positive tolerance can be expressed as a positive percent. It indicates how much time/money/etc you can spend without asking permission.
Although negative tolerances are less common than others, you can still use them. I believe that it doesn’t matter if you come in three months early or are significantly under budget.
Negative tolerances are just the same. You have drained company funds unnecessarily and for a long time. In today’s economic climate, no sponsor will be grateful.
This is not to say you shouldn’t spend company money on random things just to keep within tolerance. However, once you have fallen below your tolerance levels, it’s a good time for you to re-forecast the project budget and release any cash you won’t use.
PRINCE2(r), The 6 Tolerances
Budget and time are the most commonly used tolerances. PRINCE2(r), however, offers six tolerances: cost, scope, risk and quality, and benefits.
Let’s take a look at each one.
Types of Tolerance in PrINCE2Time/Schedule tolerance
Time tolerance is the limit of how long you can go without getting sick.