How To Conduct a Gap Analysis in Project Management

Why do some projects fail despite rigorous planning? Why do others get out of hand in terms of budget or deadlines?

The answer often lies in poor or no gap analysis at all.

Yet, this stage is essential at both project and company level. This essential practice enables us to measure the differences between plan and reality, and make any necessary corrections.

In this article, we'll be focusing on gap analysis in project management, although we'll sometimes take a more global view. Our aim is to give you all the keys you need to improve your project preparation, so that you can anticipate, react and optimize your processes.

What is gap analysis in project management?

Gap analysis: definition 

• A gap between planning and actual situation

Gap analysis involves comparing the current state with what was planned.

This implies planning financial, time and human objectives. 

• A multi-level application

While this article focuses primarily on gap analysis in the context of a project, it is really about managing a company as a whole.

Indeed, variance analysis is one of the main steps in management control. It is essential for accurate project monitoring, to identify problems and areas for improvement.

The 4 main types of deviation in project management

We will focus on the 4 main types of deviation in project management: 

1. budget variances ;
2. time differences ;
3. changes in scope of consolidation ;
4. performance gaps.

Budget variances

Also known as cost variances, these are the difference between actual expenditure and the initially defined budget. 

Time differences

Time variances take into account the discrepancy between the time needed to develop the project, as opposed to that which had been anticipated.

Changes in the scope of consolidation

The deviations in this category can be varied and concern several aspects.

Unforeseen functionalities, a change in technology, more content... These variables will generate discrepancies between the initially planned scope and the scope to be considered from now on.

Performance gaps

Performance gaps take into account the difference between actual and expected performance.

This can relate to various criteria, such as the quality delivered, the performance of a feature or campaign, or the productivity of teams. 

Other possible deviations

There are other types of deviation, such as : 

• manpower gaps, which take into account the difference between the required number of employees and those actually working on the project;
• market or product variances, which relate to the difference between actual sales and anticipated sales;
• profit variances, which highlight the discrepancy between actual and budgeted profit.

Why conduct a gap analysis?

Identifying and anticipating problems

Ensuring sound financial management

One of the main motivations for gap analysis is to identify problems. The financial aspect is usually considered first.

This exercise is a way of assessing the financial health of a project or a company. 

Provide a reliable inventory

In this way, gap analysis is used to examine the current state to check that everything is going according to plan.

This allows you to base your decisions on real facts rather than mere hypotheses. 

Compensating and rectifying the consequences of deviations

Analyze to correct

Gap analysis is only relevant if it is completed by corrective action. In reality, it is only the first step in a long process.

It gives you a clear picture of where you need to improve. Your role is then to find ways to close these gaps, which requires a well-thought-out strategy.

Use budget variance analysis tools

Note that there are powerful tools to help you identify and correct discrepancies.

Designed specifically for project management, they integrate a maximum number of automatic functions to facilitate project and company management.

Identify opportunities for improvement

Optimize and generate growth

Gap analysis is not just about corrective action. It can also identify opportunities for optimization, or even growth. 

Gap analysis enables us to take stock of the situation, the project or the company, providing valuable information. This information can then be used to guide choices, improving the decision-making process. 

The role of gap analysis in managing the resource planning

In addition to the financial aspect, resource management also benefits greatly from gap analysis as well.

By analyzing specific needs in certain skills or areas, as well as desires and availabilities, it is possible to draw up a clear inventory of available versus required resources.

As this balance can change over time, gap analysis ensures that the company or project has the right resources at the right time. Gap analysis makes resource allocation much easier.

Other benefits of gap analysis

Evolving global strategy

Gap analysis also has numerous benefits for the whole company, not just at project level.

In fact, it identifies gaps and highlights the need to optimize the overall strategy. 

Helping to prioritize

In addition, gap analysis helps to prioritize, by identifying the most relevant opportunities in a project portfolio.

Indeed, it is in the company's best interest to focus on projects where it has the necessary resources or competitive advantages. 

How do you identify gaps in project management?

Define an action plan

Identify what motivates this search

Before you rush into an in-depth gap analysis, take the time to ask yourself a few questions. After all, it's important to prepare thoroughly and draw up a precise action plan. For example, ask yourself: 

• What drives you to look for discrepancies? 
• What are your first guesses? What are you trying to find out?
• How will you accurately measure the gaps?

Getting to the root of the problem

Once you've identified the problem, the next step is to look for its root cause: why is this discrepancy occurring? This will require some investigation. 

Visualize the ideal situation

The next step in the action plan is not to find an immediate solution, but to sketch out the ideal situation to which you aspire.

Projections and scenarios are formidable tools for this task.

Gathering information

Consider all data sources

You'll be looking for specific information to back up your assumptions.

Identify any factors that could have an impact on costs (market, legal, technological or consumer trends, costs of raw materials or human resources) or timescales (downsizing, motivation, changes to equipment). 

External and internal factors

Many factors, both internal and external, can lead to deviations.

Gather as much information as possible from your service providers, suppliers and customers. Customer service and sales, in direct contact with consumers, can be an interesting source of information.

History and analysis of past deviations are also relevant.

What are the best tools for budget variance analysis?

An all-in-one tool

As we mentioned earlier, there are powerful tools available to help you identify and analyze discrepancies. 

Stafiz offers a wide range of functions, including the creation of budget forecasts or help in creating complete dashboards.

These enable you to monitor KPIs in real time and detect any deviations.

Recognized tools and frameworks

Other tools are commonly used for gap analysis, as they enable complete introspection. These are recognized frameworks.

1. SWOT (Strengths, Weaknesses, Opportunities, Threats) to identify strengths, weaknesses, opportunities and threats.
   

   

2. The 7S method (Structure, System, Style, Staff, Skill, Strategy, Shared Values), which helps to clarify how each component fits together: 

• Structure: describes the distribution of activities within the company or project (hierarchy, role)
• System: describes the processes and procedures used (IT systems, tools, workflows)
• Style: the way leaders influence the organization
• Staff: numbers and how they are recruited and trained 
• Skill: abilities and talents 
• Strategy: the way in which the company plans to achieve its long-term objectives (strategic decisions). 
• Shared values: culture and values 

How do you analyze project variances?

What recurring factors can lead to cost variances?

Whatever their nature, deviations must be analyzed to prevent them from recurring. 

Gap analysis therefore includes a research phase, as it is necessary to identify the source of the gaps. Here are a few pointers.

An erroneous estimate

A poor estimate caused by unreliable data, or an over-ambitious vision, can lead to discrepancies.

When drawing up a budget, take all factors into account (such as possible increases in raw materials and labor costs).

Uncontrolled allocation of resources can lead to large discrepancies. 

A change in scope

The addition of new functionalities, changes to the project context or the addition of unanticipated tasks can be a source of deviations. 

Risk management needs to be reviewed

Sloppy or, worse still, forgotten risk management can lead to serious discrepancies.

For example, an unanticipated budget margin can have far-reaching consequences.

An organizational problem

Internal conflicts or communication problems can affect productivity and generate time or budget variances. 

External causes 

Other external causes linked to the political or legal environment, or to suppliers, can also be the cause of discrepancies. 

How do you know whether a gap is favorable or unfavorable?

A gap is rarely favorable.

It's true that its consequences can have positive effects, such as saving time or money. However, neither of these are really enviable, as they are the sign of a poor estimate.

As a result, they can challenge your project management skills. 

In another case, it may be perceived as a loss of quality if the time consumed is lower than estimated. 

In all cases, it is advisable to draw up a production report to take stock of the situation and serve as a basis for preparing subsequent projects.

What corrective action should be taken?

Gap analysis should alert you and prompt you to adapt your strategy.

The strategy to be adopted will depend on the discrepancies observed and their intrinsic causes. However, here are a few avenues to explore in order to correct and avoid deviations: 

• improve risk analysis;
• improve estimates ;
• Precise monitoring using project management tools (budget and time reviews) ;
• optimize internal processes;
• improve team training.

Gap analysis is an essential tool in project management. It enables you to monitor progress effectively, identify anomalies and rectify them.

Beyond identification, understanding the source of deviations is crucial to applying appropriate corrective measures. While this approach is essential at project level, it can also be extended to the scale of a company's portfolios or programs. It then becomes a strategic lever for guaranteeing performance and sustaining growth.

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