Project Management is Optional!?!

Oracle, the owners of Primavera have sponsored a survey by the Economist Intelligence Unit of The Economist, looking at the link between project management excellence and long-term success. The report was based on a survey of 213 senior executives and project managers worldwide and in-depth interviews with nine executives and project management experts.

I have not had the chance to read the full report yet but one item in the executive summary really caught my attention. The editors state “An impressive 90% of respondents say project management is either critical (47%) or somewhat important (43%) to their ability to deliver successful projects and remain competitive.”

This statement raises two interpretational questions:

1. What do the other 10% do? How is it possible to undertake projects and not do project management. I would have thought is was impossible to do a project without doing project management and consequently project management was critical to doing projects. More than 50% of the people interviewed disagree. And interestingly more then 50% of project fail maybe there’s a correlation?
2. Probably a more significant question is what do the respondents to the survey mean by project management? Despite the well established standards defining project management ranging from the PMBOK® Guide to PRINCE2, do over 50% of the people responsible for project still fail to grasp the essentials??

The same survey found nearly one-half (49%) of the respondents only follow formal project management practices on large or complex projects and few (20%) use a standardised set of project management tools including enterprise-level systems. Which is consistent with Gartner’s findings that smaller project fail more frequently then lager projects.

It looks as though PMI, IPMA and academia have a lot of work to do to make project management effective in business. It would appear that whilst executives recognise the value of delivering projects on time, on budget and to the customer’s expectations very few are prepared to invest the resources needed to achieve effective project management.

This reminds me of another quote by Lister DeMarco from a few years ago: “Quality is free, but only to those that are willing to pay heavily for it!” There should be a PM equivalent somewhere…..

Complex Decision Making Explained

Complex decision making is a vital project management skill; required not only by the project manager but also by the project’s sponsor and client / customer among others.

Some of the key areas involving complex decisions include risk management, many aspects of planning (particularly optimising choices) and dealing effectively with issues and problems in a range of areas from scope and quality to cost and performance.

There is an underlaying assumption in project management (derived from traditional scientific management) that decisions will be based on a rational assessment of the situation to optimise outcomes. Unfortunately this is not true! As complexity increases assuming a ‘rational decision making paradigm’ becomes increasingly unrealistic. Human decision makers become ‘predictably irrational’.

Understanding the built in biases and ‘predictable irrational’ decision making processes used by people confronted with complex decisions can help managers requiring optimised decisions to craft strategies to minimise suboptimal outcomes. But where can busy project managers access this information?

I have just finished reading the most amazing paper on the subject that canvases the whole spectrum from risk aversion to behavioural economics in a practical, easy to read format; and it is free!

Behavioural economics and complex decision making: implications for the Australian tax and transfer system has been written by Andrew Reeson and Simon Dunsttall of the Australian national science agency, CSIRO. The report was commissioned by the ‘Henry Review’ into the Australian taxation system and is published on their web site. Whilst you can safely skip the last section which focuses on applying the knowledge to our tax system. The preceding 7 sections are focused on how people make complex decisions in any sphere and are just as relevant to complex project decisions as to complex investment and taxation decisions.

You can download this free resource from the review panel’s website: download the paper (a copy is also on the Mosaic web site on the assumption the Government site is temporary and will close once the Henry Review has reported: download from Mosaic).

If you find the report useful and you don’t live in Australia, you can buy the next Australian you meet a beer; it was his or her taxes that paid for this amazingly useful report. I know I will be keeping my copy handy for a very long time to come.

PMI COS Seminar

This week, I will be presenting live from Australia the final session of the Fall PMI College Of Scheduling (COS) Wednesday Webinar Series: Scheduling in the Age of Complexity. This hour-long event will provide key insights for better scheduling from a personal level: What is the role of the scheduler and what is our future?

The PMI-COS Fall series is designed to bring highlights from the 6th Annual Scheduling Conference held in Boston, MA earlier this year.  Archived presentations are available at http://www.pmicos.org/ondemandlearning.asp if you find them of interest, why not sign up for the College?

The Featured Presentation:   Scheduling in the Age of Complexity

Scheduling was developed as a computer based modelling process at a time when ‘command and control’ was the dominant management paradigm. The mathematical precision of the early scheduling calculations were somehow translated into certain project outcomes. Today, the certainties are no longer so apparent. Most projects run late and uncertainty and complexity are starting to take center stage.

This paper identifies the key elements in Complexity Theory to suggest the real role of a schedule in ‘the age of complexity’. It concludes by recommending a way to re-establish the role of the scheduler in the successful delivery of projects in the 21st Century.

DATE:  Wednesday, December 2, 2009
TIME:   5:00pm EST (US Eastern Daylight Savings Time); Doors open at 4:45pm

LOCATION: http://pmi.acrobat.com/r31077016/

There is no dial-in telephone option for the presentation. All voice will be through the classroom platform.

Schedule Density

I have mentioned the work being done by the CIOB (UK) to develop a practice standard for scheduling in a few posts. This valuable work is now at the public comment stage and has a number of really innovative ideas.

The concept of schedule density contained in the CIOB ‘guide’ is not dissimilar to rolling wave planning but has far more practical advice.

The concept is based on the idea that it is practically impossible to fully detail a schedule for a complex project at ‘day 1’ – too many factors are unknown or still to be developed. The CIOB advice is to plan the overall project at ‘low density’, expand the work for the next 9 months to ‘medium density’ and plan the next 3 months at ‘high density’.

Schedule Density Over Time

Low density activities may be several moths in duration. Medium density activities are no longer than 2 months and focused on one type of work in one specific location. High density activities are fully resourced, with a planned duration no longer than the schedule update period and with specific workers allocated.

Activites are expanded to increase density

As the ‘density’ of the schedule is increased, the plan takes into account the current status of the work, current production rates and what is required to achieve the overall objective of the project.

This approach has a range of advantages over more traditional ways of scheduling not the least of which is engaging the people who will be responsible for doing the work in the next 2 to 3 months in the detailed planning of ‘their work’.

More later.

The Demise of the Iron Triangle

The iron triangle was invented by Dr Martin Barnes in 1969 to demonstrate the connection between time, cost and output (correct scope at the correct quality) – see The Origins of Modern Project Management. The correlation remains but the concept of the triangle is fading and becoming more complex.

The problem with the triangle is whilst the three interconnections are relevant; the way the elements interact geometrically is not intuitive or correct. Output should react inversely to the other two dimensions. Less output is bad, but less time or cost is potentially good.

As we move into second decade of the 21st century, leaving the ‘noughties’ behind, PMI have dropped the concept of the iron triangle from the PMBOK® Guide and the search is on for more meaningful and unfortunately complex metaphors to define the challenges of satisfying a project’s stakeholders and customers. This is a multi-dimensional problem and there is a real need for a new paradigm similar to the iron triangle but representing the many different facets of success.

As Albert Einstein once said “For every complex question there is a simple and wrong solution.” And whilst the iron triangle was not intrinsically ‘wrong’ in the 70s, 80’s and possibly 90’s it is certainly incomplete in the complex world of the 2010s.

I have seen several attempts to replace the simplicity of the triangle with tetrahedrons and multi dimensional effort charts but they lack clarity of insight. Another quote from Einstein is “If you can’t explain it simply, you don’t understand it well enough.” The question and challenge is how to replace a project management icon as powerful as the ‘iron triangle’ with a more representative symbol.

What will be the new symbol of project management in the ‘teen years for the 21st century? Any ideas are welcome.

The Probability of Chance

I have just returned from a trip to Singapore where I was facilitating a workshop to set up the initial risk register and risk management plan for a $1 billion project to deliver one package in a multi billion oil development. The beginning of November is also the Spring Racing Carnival in my home state featuring the Melbourne Cup – the race that literally stops the nation. The combination of these two events and many hours sitting in aeroplanes started me thinking about the difference between project risk and the more widely understood actuarial risks managed by insurance companies and the like.

I have already posted on some of the challenges faced by project risk managers dealing with a single occurrence, the project, using theories based on constrained probability distributions in large populations (see: A Long Tail); and written a number of papers on risk management, see: http://www.mosaicprojects.com.au/Resources_Papers.html#Risk. This post looks at the challenges from a different perspective, how people in project teams perceive and understand probability.

The Singapore workshop started with the consideration of range statements for two sets of parameters, the likely impact of a risk event and the probability of it occurring. The outcomes were quite straightforward:

• >$20 million was seen as a very high impact risk through to <$500,000 for a very low impact risk.
• >70% probability was seen as a very high probability through to <5% for a very low probability.

The valuation of a ‘very high impact’ was based on a percentage of the project’s anticipated profit. Interestingly, the project manager for the overall project (some $20 billion investment) thought the monetary values were on the high side but accepted the views of the engineering company I was working with.

The focus of this post is on the difficulty of assessing probability based on limited data for a one off event such as a project. The following simple scenario illustrates the problem:

There are 3 sealed envelopes – one contains $100.

As a starting point, most people would agree there is a 33.33% chance any one of the envelopes will contain the money.

If we open one envelope and it is empty, there is now a 50:50 chance either of the remaining envelops has the money. One does, one does not.

Now to make the situation interesting…….

I give you one envelope and keep two for myself.

As a starting point you have a 33.33% chance of having the money and I have a 66.66% chance – the odds in my favour are 2 envelopes to your 1 envelope

Now I open one of my envelopes and we see it is empty. What does this do to the probabilities?

One perspective says there is now a 50:50 chance the money is in your envelope and 50:50 it is in my envelop – we know it has to be in one or the other and it has not moved.

On the other hand nothing has changed the original starting scenario – the odds in my favour were 2:1 and at least one of my envelopes had to be empty so on this basis is there still twice the probability my remaining envelop has the money compared to yours…… we have done nothing to improve your chances, you still only have one out of the three original envelopes!

Which scenario best represents the situation and why??

Now to make the situation even more interesting….

If I was to offer you $40 for your envelop would taking the money be a good or a bad bet???

If the scenario suggesting a 50:50 chance is true, the Expected Monetary Value (EMV) of your envelope is $100 x 50% = $50

If nothing has changed the starting scenario the EMV of the envelope is $100 x 33.33% = $33.33.

Which option is correct????

Peter de Jager posed a similar question to the PMI Melbourne chapter and favours the 2:1 option remaining true, many of the chapter disagreed.

Any thoughts would be appreciated.

Earned Value, Courting the Law

Jarndyce and Jarndyce drones on. This scarecrow of a suit has, in course of time, become so complicated that no man alive knows what it means. The parties to it understand it least, but it has been observed that no two Chancery lawyers can talk about it for five minutes without coming to a total disagreement as to all the premises. From the first chapter in the novel Bleak House by Charles Dickens. Jarndyce and Jarndyce is a fictional court case in Chancery but there is another court case that almost fits Dickens’ morbid description………

The A-12 “Avenger II” was to be a carrier-based stealth attack aircraft for the US Navy that has been in the courts since 1991. The plaintiffs (McDonnell Douglas and General Dynamics – since acquired by Boeing and Lockheed Martin respectively) sued for relief after the Navy terminated the A-12 development contract for default.

Based on the contractor’s Earned Value analysis that showed ‘catastrophic’ cost and schedule problems on this complex, multi-billion $ fixed price incentive contract, the then Sec. of Defense Dick Cheney withdrew his support for the program.

Wayne Abba was selected by the Department of Justice/Navy litigation team as a fact witness who could have an opinion about the EVM data because he had not been involved in the Government’s decision making process. Wayne testified in the 5th trial after the appellate court agreed with the government that performance (or lack thereof) was indeed an issue. His testimony helped set the stage for a reversal by the trial judge from his prior 4 decisions – a reversal that has been upheld by appellate courts since, most recently in June 2009; with further pleadings this month.

As Dickens continued…. Scores of persons have deliriously found themselves made parties in Jarndyce and Jarndyce without knowing how or why…… Fair wards of court have faded into mothers and grandmothers; a long procession of Chancellors has come in and gone out; the legion of bills in the suit have been transformed into mere bills of mortality; …… but Jarndyce and Jarndyce still drags its dreary length before the court, perennially hopeless.

This is an important decision for anyone involved in the proactive management of projects. If the US Governments position holds, reliable predictive data that clearly shows a ‘catastrophe’ in the making will allow project owners to take pre-emptive steps to protect their position. If the plaintiff contractors eventually prevail, the only safe option for owners will be to wait for the train wreck then try to pick up the pieces.

Hopefully we won’t have to wait another 18 years for an answer……….

Advances in Project Schedule Management

In 2007/2008, the Chartered Institute of Building (CIOB) undertook a survey of the state of time management in the UK construction industry. The findings painted a dismal picture of the current state of planning and scheduling with low usage of CPM schedules, minimal updating and almost no proactive forward management (download report summary). On a more general basis, the construction and engineering industries were at the forefront of effective time management through the 1960s, 70s and 80s (along with defense industries) which would suggest other areas of business management such as IT are unlikely to be better situated.

Based on these findings, the CIOB believes that it is essential to educate both project planners and schedulers in construction time management best practice with an aim to reduce the incidence of delayed completion on construction projects. To achieve this, the CIOB have adopted a three-phase strategy to provide the required standards of performance in effective time control:

• Phase 1
  The education training and accreditation of project schedulers, including:
  • The development of a ‘Guide to Good Practice in Project Programming and Scheduling’.
  • The production of an educational framework for current and future project schedulers.
  • The accreditation of qualifications in time management.
  • The dissemination of the Guide to other professions in the industry.
• Phase 2
  The promotion of amendments to standard forms of contract to facilitate effective time management.
• Phase 3
  The education training and accreditation of project planners.

Download the CIOB’s policy Statement.

Phase 1.1, the development of the Guide, is nearing completion. The provisional draft of the Guide is nearly ready for public comment and feedback.

I have had the privilege to be part of the team working on the development of the Guide and believe it is a major advance on anything currently available. Whilst focused on construction/engineering, the skills of effective planning and scheduling are highly transferable. Consequently, when published, the guide will be a valuable resource for PMO Managers and schedulers in most industries.

More information shortly……

Schedule Float

Scheduling has lost a lot of float in the last few years! And arguably the practice of scheduling is sinking…..

Are the two phenomena connected? Is this a total disaster or largely irrelevant??

As part of my research for the new CIOB scheduling guide, I have been digging through some old books and resources from the 1960s and 70s. 40 years ago, float was a far more sophisticated concept compared to today but how significant is this loss of insight?

You are invited to read the discussion paper ‘Schedule Float’ and then comment on this blog.

The Effective Management of Time in Complicated Construction Projects

The CIOB is finalising the publication of ‘The Guide to Good Practice in the Effective Management of Time in Complex Construction Projects’ with a public consultation period planned before Christmas leading to publication in 2010.

The primary purpose of this Guide is to set down the standards of project scheduling necessary to facilitate the effective and competent management of time in construction projects by defining the standard by which project schedules will be prepared, quality controlled, updated, reviewed and revised in practice.

Before embarking on the guide, the CIOB conducted a survey between December 2007 and January 2008 of the state of time management in a range of UK construction projects. The outcome of the survey was surprising. On simple construction projects, the range of outcomes (late, on time, early) were more or less the same regardless of the use or non-use of effective time management processes.

However, as the projects became more complicated, the difference between projects with an effective time management system and those without became significantly more noticeable. Projects with a well defined time management system were far more successful than those without!

The definition of simple and complicated derived from this study is:

• Simple Projects comprise those in which construction has the following characteristics:
  • design work is completed before construction starts;
  • single building or repetition of identical buildings;
  • less than 5 stories high;
  • without below-ground accommodation;
  • carried out to a single completion date;
  • without phased possessions or access;
  • with services not exceeding single voltage power, lighting, telephone, hot and cold water and heating;
  • a construction period of less than 9 months;
  • with a single contractor; and
  • with less than 10 sub-contracts.
• Complex Projects comprise those in which construction comprises, one or more of the following characteristics:
  • design work is to be completed during construction
  • more than one building
  • more than 5 stories high
  • with below-ground accommodation
  • with multiple key dates and/or sectional completion dates
  • with multiple possessions or access dates
  • with short possessions
  • with services exceeding single voltage power, lighting, telephone, hot and cold water and heating.
  • accompanied by work of civil engineering character
  • a construction period greater than 12 months
  • with multiple contractors
  • with more than 20 sub-contracts

This opens the question why? I would suggest the likely answer, transferable to any project and any industry, is in two parts; both related to stakeholders and communication.

The initial benefit of the process of developing the schedule on a complicated project is the insights the act of creating the schedule gives to the project management team. It is impossible to effectively communicate to the project team and other stakeholders what has to be done when if the project management group don’t have a very clear idea themselves.

‘Simple projects’ are small enough and routine enough to be mapped out in an experienced managers mind. The person intuitively knows what needs to be done. As the project becomes more complex the analysis and serial decision making inherent in the schedule development process creates insights, new information and allows the testing hypothesis until an acceptable solution is devised. At the end of the planning process, a way forward has been determined, optimised and agreed.

The greater benefit though is likely to be in the area of coordination and communication during the work of the project. No schedule is ever perfectly correct. But having an agreed schedule that everyone works towards achieving minimises coordination issues and as elements of the work occur out of alignment with the schedule, the schedule and the variance information provide the foundation for proactive discussion and decision making.

A final intangible benefit of having a schedule has been identified in new research by Jon Whitty. It would appear that simply having a schedule is important for the credibility of the project manager. The project manager’s managers expect the PM to have a schedule and consequently give more credibility to communications from the PM if the schedule is present.

The challenge facing both PMs and their managers as a consequence of these findings is to determine for their industry the difference between simple projects where minimal systems are needed and complicated project where not having a reasonably sophisticated system to help manage time, and other elements of the project, is a distinct liability.

It would seem size does matter! And the old saying ‘if you fail to plan, you plan to fail’ really only applies to the larger more complicated projects. 

Mosaic has developed a range of papers on the art and science of planning and scheduling available from Mosaic’s Planning and Scheduling Home Page.