Episode 448: How Laws and Regulations Affect Projects (Free)
Every project that you have ever worked on had at least one constraint. Maybe your current project has a fixed budget and maybe the previous one had to be completed by a certain deadline. But I am also sure of this: your projects had to follow laws and regulations.
The laws you have to follow can be major laws, like Sarbanes-Oxley here in the USA, the protection of personal data laws in the european union, or the intellectual property laws that most countries around the world have. And if you work in aerospace or healthcare then you will know all about rules and regulations concerning personal safety. But on the other hand these must-follow laws and regulations could simply be an internal regulation that tells you that all rental cars must be rented from one particular company.
So laws and regulations limit our choices and freedom to shape our projects.
And to explore this in more detail, we have Jim Franklin with us today. He has managed over $500M of Government contracts in California and knows a thing or two about laws and regulations.
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Below are the first few pages of the transcript. The complete transcript is available to Premium subscribers only.
Cornelius Fichtner: In this episode of The Project Management Podcast™, we discuss how laws and regulations limit and regulate the choices that you can make on your project.
Hello and welcome to The Project Management Podcast™ at www.pm-podcast.com. This is Episode  and I’m Cornelius Fichtner. Thanks for joining me.
Every project that you have ever worked on has had at least one constraint. Maybe your current project has a fixed budget or maybe the previous one had to be completed by a certain deadline. But I am sure of this, your projects all had to follow laws and regulations.
If you are a project manager who wants to become Project Management Professional (PMP) or PMI Agile Certified Practitioner (PMI-ACP) certified then the easiest way to do so is with our sister Podcasts --- The PM PrepCast™ or The Agile PrepCast™ and study for the exam by watching the in-depth exam prep video training from www.pm-prepcast.com.
The laws that you have to follow, they can be major laws like Sarbanes-Oxley here in the USA, the protection of personal data loss in the European Union, or the Intellectual Property laws that most countries around the world have. And if you work in aerospace or healthcare then you will know about rules and regulations concerning personal safety.
But on the other hand, these must-follow laws and regulations could simply be an internal regulation that tells you that all rental cost must be rented from one particular company. So laws and regulations limit our choices and freedom to shape our projects.
And to explore this in more detail, we have Jim Franklin with us today. He has managed over 500 million of government contracts in California and knows a thing or two about laws and regulations.
Cornelius Fichtner: Hello, Jim! Welcome!
James Franklin: Thank you so much, Cornelius! Good morning!
Cornelius Fichtner: Good morning to you too! To get us started, please tell us: What is the difference between a law and a regulation.
James Franklin: Well in summary, Congress passes laws that govern the United States and Congress has also authorized federal agencies to help put those laws in effect by creating and enforcing regulations. So that’s really the major difference and we’ll get in to some of the key regulations that I have to make sure I understand on the projects that I manage, and that’s some of the key differences right there between laws and regulations.
Cornelius Fichtner: Right. So you said Congress pretty much, the government, right, all over the world would be defining the laws.
James Franklin: Correct! And that will be at the federal level for the United States. Then you also have state laws. You could also have local laws and in each case both state and local would have regulations to make certain that those laws get enforced.
Cornelius Fichtner: Alright! Do you have a simple example for us in regards to a law, maybe something that you have personally come across on your projects?
James Franklin: Well, I think the example that you give with the Sarbanes-Oxley, I can remember working many, many years ago when that law went into effect and you know that was because of some issues that had occurred on with companies and not reporting accurately their revenues, et cetera. Within our organization, once that law came into effect, they put together some very detailed procedures. As project managers, we then had to learn those company procedures that by following those procedures, the company was compliant with the SOX, Sarbanes-Oxley law.
So you’ll find throughout this discussion that there’ll be a law or regulation and companies then have to go through and understand and develop procedures that the project managers then will follow, and that’s where the internal procedures come into play within an organization.
Cornelius Fichtner: Is it only the government that creates laws and regulations?
James Franklin: Well, like I said, if you look at the federal government has their laws and regulations. You have state and you have local, being these organizations, being a regulatory type in nature; within the company itself, you’ll have detailed procedures that really makes certain that the project managers are following those procedures to then be in compliance with various laws and regulations.
So that is kind of how I have, from my perspective, working with these large organizations as they’re so focused in following the laws and regulations to make certain that they don’t get in trouble because they don’t want to be in a situation, for example, where they could get debarred from performing government work because they did not follow regulations.
Cornelius Fichtner: Every project is really unique. Does this then mean that every project may have to follow unique laws, unique regulations?
James Franklin: Two ways to look at that. You’ll have projects: If it’s a federal-type project of working for the federal government, we have to comply with the Federal Acquisition Regulations, the FAR. And those regulations will require that we comply with certain regulations. For example, project control. We’ll have to set up requirements to follow the Sarbanes-Oxley. There’s Estimating Departments, they’ll have very detailed procedures to make certain that you’re compliant with the FAR for estimating. Procurement procedures, contract procedures. So there’ll be a standard set, if you want to call it that, of requirements that all project managers need to follow in order for the company and that project to comply with the FAR.
Now on the specific scope of work, there could be additional regulations that that project has to follow. Maybe it’s an environmental project where that project has to follow environmental regulations. Maybe the project is designing a building and they have to comply with the American Disability Act requirements.
The project-specific scope, yes! There could be different regulations that you have to follow but that FAR really kind of dictates those over-arching requirements and regulations that all projects must follow in the case of government contracts.
Cornelius Fichtner: At what point in the life span of our projects do we first have to think about and consider being in compliance with laws and regulations?
James Franklin: Well in my experience, if you start a project initiation at the charter stage looking at the key objective would be the project must comply with all applicable laws and regulations, and that would include the federal, the state, and the local level so that is a key critical objective that must be met. And then also a success criteria. A project could be successful in delivering scope, on time within budget but fail miserably if they did not follow regulations.
And then during the planning state, that’s really when you have to make certain that you are reviewing the scope of work in detail. You understand the scope and which regulations may apply to that scope of work include those as requirements, and also it could be a WBS scope deliverable, a regulation that could add to that project.
So the planning stage is so critical because at that stage, you are developing or establishing the baseline, the scope, schedule, and cost. And as an example, maybe there is a permit requirement because of a regulation and you do not realize that. You did not include it in your WBS. It’s not in your schedule. And it’s a three-month process to obtain the permit and you could see immediately, you’re behind schedule if you did not include that in the schedule baseline.
Cornelius Fichtner: Yeah! My wife, she used to work in the pharmaceutical industry and they have these permits that they needed to get from countries all over the world in order to be able to sell their pharmaceuticals in the country, and it sometimes happen that they didn’t know how long it would take. So they could simply send out the application and then they would just sitting back and twiddling their thumbs and waiting until the foreign entity would finally give you your permit and now you can continue with the project. So it was rather frustrating for them at times not being able to have a clear end date that they could work towards on their projects.
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PDUs: Business Acumen, Legal Compliance, Regulatory Compliance
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