The Use Of Blockchain In Project Management

Blockchain technology will fundamentally change project management. This is what it says in the first specialist articles and publications that can be found on this topic. But is this the truth? At first glance, the two issues have little or nothing to do with each other.

Brief Introduction To Project Management And Blockchain

Project management is a form of work and organization, a planned project to achieve a defined result within a specific time and with a detailed financial budget.

Blockchain is a digital process for decentrally storing transactions in computer systems so that it is not possible to change the transactions (forge, manipulate) subsequently.

How Are These Two Topics Related?

Project plans are the basis of contracts. In written agreements between companies, elements from a project plan are legally binding. These are often deadlines and delivery quantities, assurances from people with specific skills, quality assurance measures, and documentation requirements. The best way to describe the connection is with appointments in contracts. In the work or project contracts, deadlines for specific deliveries of partial and final results are contractually specified. These deadlines oblige the contractual partner to comply with them and not postpone them under normal circumstances. A project risk is thus transferred from the customer to the project contractor. If these deadlines are not met, contractual penalties sometimes follow, which the contractor has to shoulder,

These contractual deadlines are not arbitrarily included in the contracts by the lawyers or managers. Instead, a joint project plan is drawn up in cooperation between the two parties. The results of this planning are milestone dates and project deadlines. These dates are only included in the contract after this planning. Furthermore, it is contractually agreed that the client may not change certain framework conditions of the project so that the contractor cannot meet the milestones as a result. This is regulated by change processes that both parties have to agree to (change request). Describing all this legally and methodically so that every deviation does not lead to a conflict is complex and, above all, extensive.

The contractor, in particular, is sometimes very nervous here, as the pressure is initially on him. Before starting the project, he must prepare such a good, occasionally detailed plan that he can also comply with all contractual agreements.

This Leads To Two Effects:

Before starting the project, every risk and every requirement is analyzed in as much detail as possible so that there are no nasty surprises in the project.

Second, buffers are installed that are not visible to the contractor but are used by the contractor if something unforeseeable happens that jeopardizes the deadlines or the scope of delivery. So the result is a very high amount of detailed planning and assumptions before the project started, plus a “manipulated” planning with buffers.

However, due to the customer’s need for security, there is still a content-related problem in the ongoing project. As far as possible, the contractor refrains from allowing changes in the project, even if they would make technical sense. In this case, the contractor must again carry out a precise adjustment of the planning with the risks mentioned above and agree to a change in the contractual dates and expenses.

In case of doubt, he accepts a poorer project result before he risks paying contractual penalties. As a result, the project outcome may be worse than it could be.

Customers tend to impose more and more conditions to avoid being held responsible for a delay they may have caused themselves.

However, project plans contain many other data, which is then laboriously written into the contracts. These are, for example, exceptional project employees of the contractor who are committed to the project. Furthermore, there are obligations to cooperate on the part of the customer. This person must test and approve work results and provide the appropriate personnel for this purpose. The list goes on and on, leading to one crucial question.

Also Read: Blockchain: Towards An Unexpected Transformation Of The Education Sector

Why Is The Project Plan Not Set As The Basis Of The Contract?

There are several reasons for this; to describe all of them comprehensively would go beyond the scope of this essay, so I will only present a few reasons.

The planning must have a certain quality. For this purpose, professional project management software must be used, which also realistically displays the risks, especially for the client – for example, due to overloading of resources. A fancy PowerPoint presentation or an Excel file is not suitable here.

Furthermore, the contractor is interested in “hiding” buffers in the project; this is also possible with project management software. However, this would negatively affect the contractor’s company that such planning might also tie up too many resources for too long.

However, a much bigger problem is the probability of such a plan, no matter how detailed it is. Printouts or PDF files are often attached to the contracts. However, a project plan is more than just the “graphic” of a process or epic plan. Behind this are resources, imprecise planning, budget positions, risks at the time of printing, etc. Therefore, it is more of a digital quantity of data at this point, not only from this project but also from all other activities in the client’s company, to a particular extent, Time.

The Quality Of Planning Must Be Suitable To Have A Solid Contractual Basis

Detailed, precise planning with hundreds of work packages does not make sense. Projects are generally too difficult to predict and too volatile for that. A rather rough, phase-oriented planning that works with inaccurate data has a higher degree of reality and can be accepted by all sides.

Imprecise planning, in which the 1.6. stands, but June 2022 leaves a reasonable scope for all sides. Instead of planning essential resources by name, required abilities (skills) could be stored, which can be fulfilled by different people in the project.

The necessary capacities of the customer can also be stored if the availability is not known in detail. Instead, a (vague) minimum set of capabilities that the client must provide is planned.

Manipulation Of The Data – What Is A Baseline?

Of course, it makes sense to create a so-called base plan at the moment when the project agreement is made. A baseline is an unchangeable copy of a project plan when the baseline is formed. Like a copy of an Excel file that is no longer changed, not as a flat file, but many data sets or objects, depending on the project management system.

However, most project management systems do not store all the data in the baseline plans that the system has about the project, only a few. Frequently, dates are only used for the baseline.

Furthermore, such a copy is not free from manipulations. The basic plan is also just a collection of data records in a database that can undoubtedly be changed later. There are even project management systems that allow this quite regularly.

Ultimately, all data in a multi-project management system should be “frozen” and backed up at this point to allow later validation properly. Programs must then carry this last check out; a manual review would be far too time-consuming.

Passing On Responsibility

In today’s connected world, work on a project is often passed on to subcontractors by the contractor. Either the customer knows it and tolerates it, or he doesn’t know it. This chain “down” can reach any depth. In extensive projects, traceability is sometimes provided by gigantic project documentation. That’s unnecessary.

An example should make this clear. There are instructions for action in the PRINCE2 project process, for instance, to the project manager on how to regularly check and optimize specific plans. The fact that the project manager has also done this must be documented, preferably in a form where he ticks the box. Regardless of the benefit, whether he did it cannot be checked; he beats the box.

This is also noted in project management software that supports such PRINCE2 documentation. However, it is not indicated whether there were any risks in the digital planning and whether the project manager looked at the planning on the computer or adjusted it. He places a tick with the mouse.

Blockchain To Secure A Basic Plan As A Contractual Basis

The first evident approach would be to write each planning element as an entry in the blockchain. A subsequent manipulative adjustment of one of these data elements would virtually destroy the blockchain for this element.

However, the amount of data in the blockchain would be huge if this were done for really every planning element. Therefore, creating a single blockchain entry for the entire planning set makes more sense. Later it can be determined if the base plan was changed, but not what exactly. This is sufficient because the basic plan must not be altered in principle.

Blockchain To Secure Project Documentation

In every project planning, there are planning elements that are relevant from a contractual point of view and – much more – that are not. Milestones are such elements, while comments for work packages are certainly not.

The contracting parties would then mark which elements automatically form part of the contract in the software. When the contract is concluded, a blockchain is created for these elements, and all data of the planning element is entered as the first block. To ensure this first entry, the project management software should secure the block using an algorithm (Proof of Work).

Modern project management systems are audit-proof and document every change to a planning element in the database. This does not necessarily have to be limited to the native data of the component itself but can also map states that arise from external planning data. The risk of a work package can also change if the same resource is overloaded simultaneously in another project and thus also in this project.

Each adjustment of the data elements and any relevant state change then creates a new block in the respective blockchain, which is secured by the previous blocks (Proof of Stake) and could additionally be supplemented by a Proof of Work algorithm (to ensure that the data is with the project management software and not modified in any other way). Subsequent manipulation is impossible or only possible with unrealistically high effort.

Evaluation In The Event Of A Dispute

Since the project plan and all other necessary data are not available in written form as an appendix to the contract, the digital database must be consulted in the event of a dispute. Anyone, including lawyers or experts, can carry out this auditing.

So if there are differences of opinion about the date of a milestone, the parties to the dispute can retrieve the contract data through the first entry in the blockchain. The current planning in the system is not relevant. Furthermore, it can be tracked precisely in the blockchain when the milestone was changed, how, and, above all, by whom (this is also secured in the blockchain).

Is This Approach Feasible?

From a technical point of view, the implementation is not very complex. This is because providers such as AWS (Amazon Web Service) and other convenient services allow dealing with the blockchain. The project management solution only has to use these services and offer freely available audit software in the cloud that anyone can use to check the blockchain. Of course, this does not mean that every person can read the blockchain at will. Rather, authorized persons, such as lawyers or experts, are granted the digital interpretation of the blockchain of the disputed object.

Lawyers have to decide whether such a procedure will stand up in court. There must be procedures that certify or disclose the software manufacturers and their code in this area.

Establishing general, international legal validity would probably take forever. However, it would be sufficient if the software were certified, comparable to TISAX or ISO, and if the contracting parties agreed on this.

What Advantages Would Blockchain Have For Project Work

Of course, first of all, there is a psychological effect. Since everyone involved knows that manipulation of the project planning does not go undetected, the manipulation would be omitted.

Much more important would be the benefits for project management and the necessary bureaucracy. The contracting parties agree on a shared digital database secured by the blockchain. This is only stipulated in the contract of both parties; a written legal formulation is no longer necessary. That saves effort and would only be bad for lawyers.

The agreed obligations of all parties, such as persons to be deployed, dates or expenses, do not have to be specified in the contract either. This is all stored in the digital database, which cannot be forged. The complex documentation of the project management towards the client, such as proof of performance, status reports, etc., does not have to be created manually in text or Excel files. The documentation is created automatically by the project manager’s work and all employees.

Ergonomic software for everyone involved can easily show breaches of duty, and then everyone believes in the blockchain security in this information. For example, if an employee forgets to record the Time for work to be billed at the end of a month, both parties can agree to a subsequent recording and thus solve the problem. The fact that both parties have agreed is noted in the blockchain.

Outlook

The blockchain allows digital information and – above all – transaction data to be managed in an audit-proof and forgery-proof manner. Thanks to cross-company cooperation on platforms, all those involved have the same level of information, but they can also be sure that the data is reliable and will stand up in court.

Information is automatically generated digitally through everyday actions in this database – such as moving a milestone or recording a time. Above all, the bureaucratic effort is saved since this data no longer has to be manually transferred to project status reports or contract logs.

This example in cooperative project work is just one application area for the blockchain. Company lawyers, notaries, and other bodies that incorporate technical information and rules into a contract can be significantly relieved and are no longer confronted with the information they cannot assess professionally.

Suppose the blockchain approach is consistently further developed in this context. In that case, you can see the dimension of this invention, which will then represent a milestone in digital transformation in the 21st century.

Also Read: What Are The 3 Key Components Of Blockchain Technology

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