Management by exception is a technique that can be used to great effect to reduce the time burden of senior managers acting in key decision-making roles, who are ultimately accountable for the success of a project. This role is sometimes referred to as a project owner, project sponsor, project executive or even senior responsible owner particularly on larger, more complex projects and programmes.
To understand how this technique works, let's look at the fundamentals of good project governance. Good governance begins with a defined organisational structure, clear roles with distinct accountabilities and demarcation for directing, managing and delivering the project at each management level. It’s done by establishing and communicating controls so that if tolerances are forecast to be exceeded, the risk is escalated to the next management layer for a decision on how to proceed.
This technique inevitably relies upon a robust project assurance mechanism so that each management layer can be confident that controls are effective in terms of informed decision making. The implementation of management by exception provides for very efficient use of senior management time. It reduces their time burden without relinquishing their control (i.e. scrutiny and oversight) by ensuring decisions are made at the right time and at the right level in the organisation. This happens when the key decision maker delegates authority (but not the overall accountability for the success of the project) from one management level of the plan to the next by setting and communicating clear tolerances for cost, time, quality (criteria), risk, scope and benefits.
Despite this time saving technique, it’s somewhat ubiquitous to find in most organisations for a project board to meet regularly on a monthly basis despite not needing to convene in response to known issues? If clearly defined and communicated tolerances exist, why do project boards, composed typically of senior management who have little time to spare, routinely invest their valuable time?
If trust and transparency exist, and presuming the project hasright people with the right experience (capabilities and attitudes) in the right roles, is this really necessary?
Let's look at two of the key project management products that enable the management by exception technique.
A highlight report should provide the project board with the information required to monitor and scrutinise progress. It's an opportunity for the project manager to advise the board of any potential risks to a plan where a decision on how to proceed is required. Given the time commitments of senior management, the frequency and information requirements of the highlight report should be specific to the needs of the board to support their remit. Where a plan is forecast to exceed agreed tolerances, the project manager produces an exception report. It's prepared not only to inform the board of the risk context but also to offer viable options and recommendations for a possible way forward.
A key decision maker who is time burdened will only be effective by getting involved when exceptions occur. In the absence of true management by exception, senior managers will forever be inundated with project board meetings where discussion is had but no decision on how to proceed is required.
In summation, for time poor senior management it's imperative that the management by exception technique is implemented correctly and should be at the heart of empowering people to self-organise and stay in control. What is required is clear and realistic tolerances to exist - for cost, time, quality (criteria), risk, scope and benefits - so the project manager can effectively focus on the day-to-day management of a project without the frequent and often unnecessary involvement of the board.