PRINCE2 Project Management

Peter Strempel

Somewhere between 60 and 90 per cent of all business projects fail, run over budget, or deliver only part of their expected outcomes because of bad planning and management [1].

If we think of projects as any activity that isn’t part of normal operations, that’s a sobering prospect in the era of rapid change and almost continuous change-related projects to keep organisations competitive and profitable.

That’s why it literally pays to get serious about disciplined and goal oriented project management. One of the most commonly used project management methodologies in Australia and the world today is PRINCE2, which stands for Projects in Controlled Environments (version 2).

This methodology incorporates the principle that project management methods should be tailored to suit specific needs and environments, meaning that PRINCE2 can be used just as effectively for small-scale and short-term projects as for the largest and longer-term undertakings.

Project management seen as part of the strategic management domain
FIGURE 1: Project management seen as part of the strategic management domain.

What PRINCE2 does not address is the usefulness of accessing the methods and techniques of other disciplines. To explain, consider project management in the context of strategic management, as illustrated in Figure 1.

  • It overlaps with enterprise architecture because projects should be guided by an overall organisational strategy, add value to the organisation’s capabilities, be integrated into overall operations, and align with existing processes and systems.
  • It overlaps the domain of operational management because project teams are generally seconded from operational functions, and project outcomes are usually operationalised.
  • It overlaps with business process management because project planning incorporates its own process development and iterative improvement, often realised as detailed Gantt charts. The visual Business Process Model and Notation (BPMN)Figure 2 below is an example of a simple BPMN diagram. More information is given on my business process management page. language can sometimes be used in its own right to clarify project planning or to complete project work packages.
  • It overlaps with ITILInformation Technology Infrastructure Library (ITIL). See my separate page on the subject. to the extent that any project may touch on changes to ITSMInformation Technology Service Management (ITSM) is a method for aligning IT with business objectives. See my separate page on the subject., such as incorporating technology support for project deliverables.

Knowing of this overlap probably makes PRINCE2 methods even more useful than they might be in isolation when it comes to practical problem solving and customising the methods to suit the specific and unique circumstances of individual projects.

Figure 2 illustrates a high level project process as it might exist in a large organisation. This perspective is chosen to illustrate the strategic planning overhead that can and should exist for successful project planning and execution.

FIGURE 2: A high level overview of the project management process.
FIGURE 2: A high level overview of the project management process. Click on the image for a larger view.
  • Each process component illustrated in the diagram with a small square and a plus symbol indicates that it is a collapsed process that can be expanded in its own diagram to show more granular details of process steps and interactions. The collapsed process notation is used to keep the diagram simple while still hinting at how complex and intricate a more detailed representation of this overview might be.
  • At the highest level, project planning is related to overall organisational strategy as the articulation of efforts to improve organisational performance or new lines of business.
  • Projects are a means of transforming all or some part of the organisation’s operations to meet strategic objectives.
  • In large organisations, portfolio management is the highest level of managing programmes of projects. So, for example, a portfolio in an engineering services firm might consist of programmes to introduce facilities management, to expand environmental remediation services to the oil and gas industries, and to modernise IT systems for international financial management efficiencies. Each of these programmes might have several projects to realise its specific planned programme transformation goals.
  • For individual projects, project boards, and project managers, this strategic overhead is likely to mean the application of common methods, policies, principles and processes.
  • In smaller organisations the entire strategic overhead might be collapsed into a single function or person.
  • The purpose of a project board is to provide governance and supervision to individual projects without getting involved in their day-to-day management. A board may be composed of a wide cross section of stakeholders, or just the project manager and a senior manager with responsibility for expenditure and return for investment.
  • Under a PRINCE2 framework, a project manager has wide freedom to customise a comprehensive process model to suit specific circumstances, but the process remains focused on a few essentials, which include an initial and continuing business justification, and the steps illustrated in Figure 2 above.
  • The project manager usually works with team leaders of project teams to develop work packages, realistic timelines, and to ensure deliverables come in on time and budget. In smaller organisations, the project manager might also double as a team leader, and maybe even as a specialist team member.
  • In Figure 2 there is no end point to the process. Instead an intermediate end is illustrated at the conclusion of the process fo directing a project. This is to acknowledge the perspective presented as one of a repeating process. A diagram illustrating only the process for a single project would have a definite end point.

Figure 3 illustrates some of the approaches and issues that can be addressed by project managers in PRINCE2 planning. Of particular importance is a business justification for the project that continues to be valid at each stage of the project, and the approach of ‘managing by exception’, which really means not micromanaging project aspects that are going to plan rather than focusing on addressing any unforeseen circumstances or project failures.

The 'pillars' of PRINCE2 project management
FIGURE 3: The ‘pillars’ of PRINCE2 project management. Click the image for a larger view.

Seven principles and themes stressed as essential for a project to deserve being labelled as a PRINCE2 project, and shown in Figure 3 above, are described in greater detail in Tables 1 and 2. It should be noted that one of them is tailoring projects to suit specific organisational circumstances and requirements. That makes it as flexible a method as the project manager is creative in accommodating specific requirements.

CONTINUED BUSINESS JUSTIFICATION There must always be a valid and agreed business case for the project, and for continuing with it through its various stages. This can be about costs and anticipated return on investment (ROI), or some other measure, so long as it is agreed at the outset and is monitored throughout the project lifecycle.
LEARN FROM EXPERIENCE Previous project experiences, and lessons learnt in the current project should form part of all new planning and execution. Experience in this context can also include insights provided by suppliers, or lessons learnt by and from other organisations.
DEFINED RÔLES AND RESPONSIBILITIES There must be a clearly defined structure of authority and responsibility so there is no confusion about decision-making and escalation to move the project forward effectively.
MANAGE BY STAGES Projects should be broken down into manageable stages. Sometimes there is only one stage for a small or short-term project.
MANAGE BY EXCEPTION To avoid micro-management, the project manager’s focus should be on managing unexpected circumstances and resolving problems whose resolution is beyond the capabilities of team leaders or team members.
FOCUS ON PRODUCTS The more clearly defined the project deliverables are, the better able the project team will be to avoid spending time and effort on non-essential features or work. All desired project outcomes should be considered as products and work packages should be designed to target the most efficient delivery of those products.  Project planning and reporting is always also a project product.
TAILOR TO SUIT PROJECT ENVIRONMENT PRINCE2 methods and tools should be applied in a common-sense way to suit the project host organisation’s goals, resources, and structure. But the seven principles and themes should be maintained no matter how streamlined the project management process becomes.
Adapted from OGC (2009), Managing Successful Projects With PRINCE2, pp. 11-14.
BUSINESS CASE Tying in with the business justification principle, this theme is about delivering agreed measurable value to the host organisation by maintaining a focus on the continued viability of being able to deliver that value at every stage of the project lifecycle.
ORGANISATION The host organisation must be able to resource the project adequately with funding, materials, and staff, as appropriate, and normal operations or other projects should not represent barriers to achieveing expected outcomes. A lack of commitment to this theme
always makes a project unviable.
QUALITY There must be agreed quality criteria for project products, usually specified in the product descriptions, and not necessarily complex or hard to measure. But there is scope in this theme to be very specific about acceptable quality tolerances.
PLANS All project work should be planned. A plan can be as simple as a verbal agreement reached in an informal meeting, or as complex as a hundred page document with appendices specifying every aspect of a plan. PRINCE2 offers scope to delegate or defer to specialists when it comes to planning for change, communication, exceptions, quality, risk, and other project dimensions that may require their own full-time personnel.
RISK Because projects typically operate under greater uncertainty about outcomes than normal operations, PRINCE2 methodology has a strong emphasis on risk management. The granularity of managing risk is dependent on the organisation’s capacity to balance the costs of such management with expected rewards.
CHANGE Change management is today a common management aspect in larger organisations, but even in more agile, smaller businesses, projects inevitably entail change which should be managed to ensure minimal interference with normal operations, and to ensure that changing circustances do not make a project irrelevant or unviable.
PROGRESS Keeping a sharp focus on progress, reporting on it with agreed metrics, and the authority structures necessary to drive a project forward are all essential components of a sound PRINCE2 project plan.
Adapted from OGC (2009), Managing Successful Projects With PRINCE2, pp. 17-18.

PRINCE2 has its critics. Some say it turns project managers into slaves of bureaucratic paperwork rather than allow them to behave like proactive professionals. Others regard certification – three to four-day training courses followed by a multiple choice test – as a money-making scam rather than worthy industry accreditation. A third common critique is that PRINCE2 removes project managers from decision-making while advocating the inclusion of suppliers and vendors, whose vested interests ought to be seen with suspicion rather than included on project boards [2].

There is some justification for such critiques in circumstances where governance controls are too rigid for tailoring to occur, or where project managers are too inexperienced to risk departure from literal application of textbook methods. And PRINCE2 is certainly a proprietary, commercial product, heavily promoted by AXELOS, a joint venture between the British government and London-based outsourcing firm Capita. The object is to drive a profitable certification and re-certification business which offers short training courses and examined accreditations costing thousands of dollars.

Unlike many AXELOS-certified project managers in the market, I have a track record of using both the Project Management Body of Knowledge (PMBOK) and PRINCE2 methods in practice before spending 16 weeks (not just a few days, as in accreditation programmes) in my IT master’s degree studying PRINCE2 techniques in detail, and applying them to a variety of circumstances in practical problem-solving scenarios.


My application of PRINCE2 is based on my understanding that at its core it needs to be no more complicated than the most simple and efficient application of its seven principles and themes. I am also able to extend my application of PRINCE2 methods by drawing on my expertise in business process management, enterprise architecture, and IT service management. Complementing and enhancing that expertise is my experience with the Queensland Chamber of Commerce and Industry, and my Master of Business Administration (MBA) degree, which have given me a strong business focus.

I am hands-on, and experienced in managing project team leaders, teams, budgets, and outcomes. I do this directly, and keep management informed both informally, in regular update meetings, and formally in documented reports, so there are never any surprises, no backside-covering excuses, and the project always maintains the agility to adapt to changing circumstances. In a business environment in which the unexpected occurs routinely to frustrate the best laid plans, this is the kind of flexibility you need for your projects to succeed.

If you are concerned that your organisation might be too small to support a professional approach to project management, I have direct experience in tailoring the PRINCE2 method to small-scale and not-for-profit projects in which no one has the time for useless paperwork, and the emphasis is on least-cost, quick outcomes. You can examine a plan I developed for a not-for-profit organisation between March and July 2016 (opens in a new browser tab). For reasons of confidentiality, some of the content has been redacted, meaning that some images do not display and all links to external sources do not work, but the document structure will show you that even the smallest organisations can take advantage of professional project management methods.

Contact me to discuss your project management needs. An initial discussion of your objectives won’t cost you a thing.

RELATED: Read my case study on the 2016 online census project for an insight into how wrong things can go if projects aren’t managed the right way.

[1] See, for example, the Project Management Institute’s Pulse of the Profession 2015: Capturing the Value of Project Management 2015, Capterra consultant Rachel Burger’s comment on project management statistics, or an analysis by Gartner’s Lars Mieritz of results from a survey about IT project performance in organizations across North America, France, Germany and the United Kingdom.

[2] See, for example, PMIS Consulting Operations Manager Kevin Lonergan’s perspective on PRINCE2, or management consultant Jurgen Appelo’s argument against PRINCE2 certification.