Arbitration has a long history

As a graded Arbitrator, born a Kentish Man in the Western part of the County of Kent (UK), I was interested to read about a project to put on public display in Rochester Cathedral, the Textus Roffensis currently held in the archives at Rochester Kent.

The Textus de Ecclesia Roffensi per Ernulphum episcopum (The Book of the Church of Rochester through Bishop Ernulf), is a mediaeval manuscript that consists of two separate manuscripts that were written between 1122 and 1124, some 60 years after the Norman conquest of 1066. One part is the legal records of the Church.

From a legal perspective, the interesting part is a recording of the Saxon legal codes used in the Kingdom of Kent prior to the Norman invasion:

• The Law of Æthelberht is a set of legal provisions written in Old English, probably dating to the early 7th century. It originates in the kingdom of Kent, and is the first Germanic-language law code. It is also thought to be the earliest example of a document written in English.
• The Law of Hlothhere and Eadric is an Anglo-Saxon legal text. It is attributed to the Kentish kings Hloþhere (died 685) and Eadric (died 686), and thus is believed to date to the second half of the 7th century. Law of Hlothhere and Eadric has more focus on legal procedure and has no religious content
• The Law of Wihtred is an early 8th-century code, written in language more modernised than the earlier codes and focuses on the rights of the Church (following the introduction of Christianity to Saxon England).

Provision 6 in the Law of Law of Hlothhere and Eadric is important to the understanding of the Anglo-Saxon arbitration process. A person, once accused, must take an oath promising to abide by the decision of a judge or accept a fine of 12 shillings. The accuser and accused must try to seek out an arbitrator acceptable to both. Once the judgment is delivered, the one ruled against must make good to the other, or swear on oath that he is innocent.  If the accused refuses to co-operate, he is liable to a fine of 100 shillings – a freeman’s wergild – and forbidden to swear his innocence in future.

This Law is also important for showing that the Kentish kingdom had control of London in the late 7th century. Provision 11 rules that Kentish men buying property in London must do so in public in the presence of two or three freemen of good standing or else before the king’s wicgerefan, port-reeve. A predecessor of these kings, Eadbald son of Æthelberht (died 640), had issued a coin in London earlier in the 7th century.

The Saxon approach to law was focused on restoring the rights of an injured party through arbitration, based on the consent of the people (not Royal Decree); these same principles of fairness and justice re-surfaced in the Magna Carta some 100 years later in 1215 when the Barons reclaimed the rights of the people to a fair trial and limited the arbitrary discretion of the Crown.  Magna Carta is based on the laws recorded in the  Textus Roffensis making the Textus Roffensis a more significant  if less well known document.

From a modern perspective, apart from the ability to ‘swear an oath of innocence’ the concept of Arbitration detailed in the Law of Hlothhere and Eadric is remarkably similar to modern Arbitration provisions. It is a pity that such an effective dispute resolution process is little used and frequently resembles a court process rather than a practical dispute solving system.

Who Manages Benefits?

I attended the Benefits Realisation Summit in Sydney earlier this week which was focused on two significant ‘launches’ – the Australian launch of Managing Benefits, the official reference guide for the APMG qualification of the same name and the launch of the Maximiser benefits management software:
- See more on Managing Benefits
- See more on Maximiser

Managing Benefits will require a couple of posts over the next couple of months to cover the depth of information available to organisations to achieve the best return on their investments in projects and programs, and my contribution to the Benefits Realisation Summit was focused on understanding the links between stakeholders, the overall value chain, and the organisation’s project delivery capability (download the presentation).

The area of discussion I found most interesting at the summit was around the roles and responsibilities of the different managers involved in realising benefits and creating value. As a starting point there was a very good definition of the stages involved in creating value, based on the concept of developing a new retail shop:

• The output from the project to build the shop is a fitted out facility.
• The outcome from the staffing and stocking of the shop is a shop selling goods to customers.
• The benefit realised from the shop is the monthly profits from sales.
• The value created by the new business is its potential ‘sale price’ which is usually calculated as a multiple of the annual earnings (typically somewhere between 5 and 12 times the annual profit).

The realisation of the value outlined above requires a ‘chain’ of decisions and management actions:

• The chain starts with decisions around the type of shop, its location, size, etc. The overall value chain is discussed in The failure of strategic planning and the front end processes in Linking Innovation to Value.
• Once the optimum project has been selected, the organisation then needs to be capable of efficiently delivering the project and creating the required output. Project Delivery Capability (PDC) is discussed in White Paper WP1079.
• Once the project’s outputs are created, the requirement to make efficient use of them within the organisation requires effective organisational change management; this facet of the value chain is discussed in WP1078.
• Then, assuming the original concepts used in the business case were accurate, the intended benefits are realised and value is created.

Within all of these stages, the key to creating the intended value is effective benefits management; this is the focus of the Managing Benefits book and the objective of the Benefits Realisation Summit.

Maximising the benefits realised from a project or program is not a solo effort, it requires the effective cooperation of a number of managers with defined roles and responsibilities operating effectively as a team:

Each of the managers above has a distinct role to play:

• The Senior Management Grouphave ultimate responsibility for generating value from the organisation’s investment in a project:
  • The role of senior management and portfolio management in the pre-project phase is ensuring the right projects are selected for the right strategic reasons
  • Once the project has transitioned its output into operations, the senior management group responsible for the operation of the organisation’s business-as-usual processes need to make effective use of the deliverable to realise benefits and as a consequence, generate the intended value.
• The Sponsor is the senior manager responsible for taking ownership of the business case, approving the Project Charter once the organisation has agreed to fund and resource the project and ensuring the project’s outputs are effectively transitioned into operations and used effectively. The role of the sponsor is discussed in WP1031. From a benefits realisation perspective, the Sponsor (or Senior Responsible Owner – SRO) is the manager with primary responsibility for ensuring the intended benefits are realised. The sponsor may fulfil the role of benefits owner personally, or liaise with the designated benefits owners to ensure the benefits are realised (the benefits owner is the person responsible for the realisation of a specific benefit).
• The Sponsor is supported by two specialist managers:
  • The Project Manager responsible for the efficient delivery of the project and
  • The Change Manager responsible for managing the organisational change needed to make use of the new product, process or service.
• The role of the Benefits Manager is partially advisory, and partly an assurance role. The Benefits Manager should be responsible for developing an effective set of metrics supported by a system for identifying and measuring benefits (planned and realised) and should also be responsible for validating the realised benefits (see more below).

The relationship between the project and change managers
Change management and project management are different skills requiring different training and different personality types. Both roles are critical and should support the sponsor in achieving the best possible transition of the project’s outputs into operations.

During the life of the project the project manager is assisted by the change manger to ensure the project delivers the most useful output, the change manger also works on preparing the organisation for the change. The focus is creating the ‘right’ outputs as efficiently as possible and this is primarily a project management function.

During the critical transition phase the focus changes, the project manager’s role should shift to focus on helping the change manger to ensure the projects deliverables ‘work’ in the organisational setting. The project manager will also be working on project closure during this period but this should be secondary to ensuring the planned benefits are capable of being realised.

Throughout the whole process, the change manger is primarily responsible for facilitating the organisational change aspects of the initiative including of all of the processes involved in embedding the new product, process or service within the organisation and supporting its adoption through to the point where it is functioning as a normal part of the organisation’s ‘business-as-usual’ capabilities. This may require some level of support for two or three years after the project has finished.

The effect of programs and program management
Programs are created to manage the work of several projects in a coordinated way, may include some operational work for a period and many are set up specifically created as organisational change agents. The different types of program are outlined in WP1022.

If a project is a component of a program, the program manager is responsible for creating the project and is usually acts as the project’s sponsor. The program is responsible for the change management processes as part of its core integration and coordination functions and the program sponsor has overall responsibility for the return on investment in the program.

The roles and responsibilities of the Benefits Manager
The concept of a Benefits Manager is relatively new. The Benefits Manager provides a benefits realisation support service to sponsors, program managers, change managers and benefits owners. Some of the functions include:

• Develop, maintain and progressively enhance the benefits measurement system used by the organisation.
• Provide scrutiny of each business case to assure the organisation the benefits claimed are realistic and achievable within the proposed timeframes.
• Lead the benefits identification and mapping processes for project and programs.
• Assisting with the development of the benefits realisation strategy and plans for projects and programs.
• Help with the identification and optimisation of additional benefits, dis-benefits and assess the impact of changes from the benefits realisation perspective.
• Tracking and reporting on the actual realisation of benefits by the organisation.

This is an important role both from the facilitation perspective and the assurance perspective. People with a vested interest in the value of benefits proposed or realised should not be the people measuring their value; this is an untenable conflict of interest. The Benefits Manager provides independent assurance that the benefits proposed in the benefits realisation plan have been achieved to the extent defined in the plan, at the time defined in the plan and any variances are identified and explained or understood. For more on assurance see WP1080.

Conclusion
Benefits cannot be managed directly; they are a consequence of other management actions and decisions. An organisation will maximise the benefits actually realised by maintaining a focus on benefits from the early stages of project initiation right through to the point where they are fully realised by the operations of the changed organisation.

White Paper Updates

We maintain a collection of White Papers on the Mosaic website focused on elements of project management skills and knowledge. These White Papers are freely available for downloading and use under the Creative Common’s licence.

Over the last month we have augmented and added to the collection including:

Adding:
WP 1086 – The value of standard operating procedures
WP 1085 – Root Cause Analysis

Augmenting and updating:
WP1045 – Methodologies
WP1024 – Negotiating
WP1081 – Earned Value formulae
WP1004 – Lessons Learned

The full list of White Papers in number order is at: http://www.mosaicprojects.com.au/WhitePapers.html

Possibly more useful is our PM Knowledge Index that sorts the White Papers and other publications by topic based on the PMBOK® Guide index structure: http://www.mosaicprojects.com.au/PM-Knowledge_Index.html

PMBOK 5th Edition some key changes #1

We are starting work on the updates to our training courses (for the change dates see: Examination Updates) and rather like most of the enhancements in the 5th Edition (due for publication on 31st December). Over the next few months we will be posting a number of commentaries on the changes and improvements. This post looks at some of the key changes.

The new PMBOK® guide now has 47 processes (up from 42) and a new Knowledge Area:

Four planning processes have been added: Plan Scope Management (back from the 3rd Edition), Plan Schedule Management, Plan Cost Management, and Plan Stakeholder Management. This change provides clearer guidance for the concept that each major Knowledge Area has a need for the project team to actively think through how the related processes will be planned and managed, and that each of the subsidiary plans are integrated through the overall project management plan, which is the major planning document for guiding further project planning and execution.

The addition of a new knowledge area called ‘Stakeholder Management’ has been created making 10 Knowledge areas. In keeping with the evolution of thinking regarding stakeholder management within projects, this new Knowledge Area has been added addressing Project Stakeholder Management. Information on stakeholder identification and managing stakeholder expectations has been moved from Project Communications Management to this new Knowledge Area to expand upon and increase the focus on the importance of appropriately engaging project stakeholders in the key decisions and activities associated with the project. New processes were added for Plan Stakeholder Management and Control Stakeholder Engagement. We will be discussing this important initiative in later posts.

Data flows and knowledge management concepts have been enhanced:

The PMBOK® Guide now conforms to the DIKW (data, information, knowledge, wisdom) model used in the field of Knowledge Management. Information/Data is segregated into three phases:

Work Performance Data. The raw observations and measurements identified during the performance of the project work, such as measuring the percent of work physically completed.

Work Performance Information. The results from the analysis of the performance data, integrated across areas such as the implementation status of change requests, or forecasts to complete.

Work Performance Reports. The physical or electronic representation of work performance information compiled in project documents, intended to generate decisions, actions, or awareness.

Understanding the information in the reports and making wise decisions are functions of the competence of the individual manager reading the report and are therefore beyond the scope of a process (for more on effective communication visit our PM Knowledge Index )

Annex A1 – The Standard for Project Management of a Project created.

This new annex has been designed to serve as a standalone document. This positions the Standard for Project Management away from the main body of the PMBOK® Guide material allowing the evolution of the Body of Knowledge material to be separated from the actual Standard for Project Management. Chapter 3 remains as the bridge between Sections 1 and 2 and the Knowledge Area sections and introduces the project management processes and Process Groups as in the previous editions of the PMBOK® Guide.

More on the improvements next time – in the interim, from now onward our daily question will be Tweeted with reference to both the 4th and the 5th Editions of the PMBOK® Guide: see today’s question.

Thoughts on ISO 21500

With ISO 21500 now in the public domain there seems to be a rush of people wanting to make money out of the document, primarily talking about certification and assessment. People proposing these concepts either don’t understand the basics of project management or don’t care, assuming organisations that buy their services are even less informed.

Whilst anyone can offer a certification based on knowledge of the standard, this will be a simple memory test with no real relevance to project management capabilities for the simple reason ISO 21500 set out what needs to be achieved, not how to achieve it.

This is quite different to the PMBOK® Guide and APM BoK, and other bodies of knowledge that contain a substantial amount of useful knowledge and is the key differentiator between a ‘standard’ and a BoK – standards define ‘what’; BoKs demonstrate ‘how’. The actual ‘ANSI standard’ in the PMBOK® Guide is one short chapter in the 4th Edition and an appendix in the 5th Edition. The balance of the 400+ pages in the PMBOK contain useful knowledge, and therefore by definition, are not part of the standard.

Similarly, because ISO21500 it is a standard, it IS NOT a methodology and bears no resemblance to a methodology. Organisations can build their methodology based on a standard but this involves a lot of work. To understand the differences between standards and methodologies see: http://mosaicprojects.wordpress.com/2009/04/11/pmbok-v-methodology/ and for more on developing a methodology see: http://www.mosaicprojects.com.au/WhitePapers/WP1045_Methodologies.pdf

Whilst I’m sure someone will be offering certification options for commercial reasons before long. The processes defined in ISO21500 are at a very high level and certifying that someone has for example ‘developed a schedule’ is next to useless (but this is all ISO21500 will support). A valid certification should look at the quality and use of the schedule not the simple fact a piece of paper called a schedule exists! There are valid assessment models available like P3M3 and OPM3 that are designed to assess maturity; for more on these models see: http://www.mosaicprojects.com.au/PM-Knowledge_Index.html#OrgGov5

Just for the record, ISO21500 was not designed to facilitate certification or accreditation; it has been designed to provide an overarching framework to facilitate the alignment of national standards and terminology world-wide. If it achieves this, the standard will enable the standardisation of the practice of project management globally over time and will have achieved its primary design objective.

Root Cause Analysis

Learning lessons from projects is not as simple as you may think! Projects are complex adaptive systems linking people, processes and technology – in this environment, useful answers are rarely simple. Our latest White Paper WP1085 Root Cause Analysis looks at some techniques that may help ‘learn lessons’ and solve problems.

The limitations of root cause analysis

Learning lessons from projects is not as simple as you may think! Projects are complex adaptive systems linking people, processes and technology – in this environment, useful answers are rarely simple.

Certainly when things go wrong stakeholders, almost by default, want a simple explanation of the problem which tends to lead to a search for the ‘root cause’. There are numerous techniques to assist in the process including Ishikawa (fishbone) diagrams that look at cause and effect; and Toyota’s ‘Five Whys’ technique which asserts that by asking ‘Why?’ five times, successively, can you delve into a problem deeply enough to understand the ultimate root cause. The chart below outlines a ‘Five Whys’ analysis of the most common paint defect (‘orange peel’ is an uneven finish that looks like the surface of an orange):

Source: http://www.moresteam.com

These are valuable techniques for understanding the root cause of a problem in simple systems (for more on the processes see WP1085, Root Cause Analysis); however,  in complex systems a different paradigm exists.

Failures in complex socio-technical systems such as a project teams do not have a single root cause. And the assumption that for each specific failure (or success), there is a single unifying event that triggers a chain of other events that leads to the outcome is a myth that deserves to be busted! For more on complexity and complex systems see: A Simple View of ‘Complexity’ in Project Management.

Complex system failures typically emerge from a confluence of conditions and occurrences (elements) that are usually associated with the pursuit of success, but in a particular combination, are able to trigger failure instead. Each element is necessary but they are only jointly sufficient to cause the failure when combined in a specific sequence. Therefore in order to learn from the failure (or success), an approach is needed that considers that:

• …complex systems involve not only technology but organisational (social, cultural) influences, and those deserve equal (if not more) attention in investigation.
• …fundamentally surprising results come from behaviours that are emergent. This means they can and do come from components interacting in ways that cannot be predicted.
• …nonlinear behaviours should be expected. A small change in starting conditions can result in catastrophically large and cascading failures.
• …human performance and variability are not intrinsically coupled with causes. Terms like ‘situational awareness’ or ‘lack of training’ are blunt concepts that can mask the reasons why it made sense for someone to act in a way that they did with regards to a contributing cause of a failure.
• …diversity of components and complexity in a system can augment the resilience of a system, not simply bring about vulnerabilities.

This is a far more difficult undertaking that recognises complex systems have emergent behaviours, not resultant ones. There are several systemic accident models available including Hollnagel’s FRAM, Leveson’s STAMP that can help build a practical approach for learning lessons effectively (you can Google these if you are interested…..)

In the meantime, the next time you read or hear a report with a singular root cause, alarms should go off, particularly if the root cause is ‘human error’. If there is only a single root cause, someone has not dug deep enough! But beware; the desire for a simple wrong answer is deeply rooted. The tendency to look for singular root causes comes from the tenets of reductionism that are the basis of Newton physics, scientific management and project management (for more on this see: The Origins of Modern Project Management).

Certainly starting with the outcome and working backwards towards an originally triggering event along a linear chain feels intuitive and the process derives a simple answer that validates our innate hindsight and outcome bias (see WP1069 – The innate effect of Bias). However the requirement for a single answer tends to ignore surrounding circumstances in favour of a cherry-picked list of events and it tends to focus too much on individual components and not enough on the interconnectedness of components Emergent behaviours are driven by the interconnections and most complex system failures are emergent.

This assumption that each presenting symptom has only one cause that can be defined as an answer to the ‘why?’ is the fundamental weakness within a reductionist approach used in the ‘Five Whys’ chart above. The simple answer to each ‘why’ question may not reveal the several jointly sufficient causes that in combination explain the symptom. More sophisticated approached are needed such as the example below dealing with a business problem:

Source: http://www.bulsuk.com/2009/07/5-why-analysis-using-table.html

The complexity of the fifth ‘why’ in the table above can be crafted into a lesson that can be learned and implemented to minimise problems in the future but it is not a simple!

The process of gathering ‘lessons learned’ has just got a lot more complex.

Productivity decline should generate more projects

Projects and programs are the key organisational change agents for creating the capability to improve productivity through new systems, processes and facilities. But only if sensible projects are started for the right reason.

Declines in productivity seem to be widespread. In Australia, labour productivity in the market sectors of the economy increased at 2.8% per annum between 1945 and 2001, reducing by 50% to an annual rate of 1.4% between 2001 and 2001.

• The measure of Labour Productivity is the gross value added per hour of work.
• The ‘market sectors’ measured exclude public administration, education and healthcare where measurement is almost impossible.

Some of this change can be attributed to macro economic factors, there were massive efficiency gains derived from the shift from paper based ‘mail’ and copy typist to the electronic distribution of information, improved global transport systems (particularly containerisation) and the restructuring of manufacturing post WW2. These massive changes in the last half of the 20th century are not being replicated in current.

Whilst this decline in the rate of improvement in labour productivity is significant, the capital inclusive index is a more telling statistic. The multi-factor productivity index which includes the capital invested in production, giving a purer measure of the efficiency with which labour and capital are combined to produce goods and services. In the six years leading up to 2001, this measure of productivity grew by an average of 1.5% per annum, in the decade between 2001 and 2011 this reversed and productivity fell by 0.4% per annum.

Around 40% of the decline in the last decade can be explained by massive investments in mining and utilities that have yet to generate a return on the capital invested. The other 60% represents the massive cost of ‘new capabilities’ in general business for relatively small, or no improvement in productivity.

One has only to look at the ever increasing number of ‘bells and whistles’ built into software systems ranging from high definition colour screens to features that are never used (and the cost of upgrading to the ‘new system’) to understand the problem. 90% of the efficiency gain came with the introduction of the new system many years ago, the on-going maintenance and upgrade costs often equal the original investment but without the corresponding improvement in productivity. Another area of ‘investment’ for 0% increase in productivity is compliance regimes. Whilst there may be good social arguments for many of these requirements, the infrastructure and systems needed to comply with the regulations consume capital and labour without increasing productivity.

In Australia general management have been rather slow to appreciate the challenge of declining productivity, the impact being cushioned by a range of other factors that helped drive profitability. But this has changed significantly in the last year or so. There is now an emerging recognition that productivity enhancing organisational change is an imperative; and smart management recognise this cannot be achieved through capability limiting cost reductions.

Organisations that thrive in the next decade will:

• Enhance customer satisfaction and service,
• Enhance their engagement with their workforce, the community and other stakeholders,
• Enhance their products and capabilities, and
• Improve their labour productivity.

Achieving a viable balance across all four areas will require an effective, balanced strategy supported by the efficient implementation of the strategic intent through effective portfolio, program and project management capabilities that encompass benefits realisation and value creation.

The three key capabilities needed to achieve this are:

• The ability to develop a meaningful and practical strategic plan.
• An effective Project Delivery Capability (PDC); see: WP1079_PDC.
• An effective Organisational Change Management Capability; see: WP1078_Change_Management.

Improving productivity is a major challenge for both general management and the project management community; and the contribution of stakeholder management and project management to the overall effort will continue to be a focus for this blog.

Linking Innovation to Value

In a recent post looking at the The failure of strategic planning  and the overall value delivery chain centred on projects and programs, the link between innovation and the strategic plan was raised briefly. The purpose of this post it to take a closer look at this critical ‘front end’ of the value chain because it does not matter how well you do the wrong projects! The ability to generate sustainable value for an organisation’s stakeholders requires the right projects to be done for the right reasons; and yes, they also need to be done right!

The section of the ‘value chain’ leading into a portfolio management decision to select a project or program as a viable investment is far more complex than the section after. Once a project or program has been selected, it needs to be accomplished efficiently, the outputs transferred to the organisation and the organisation adapt to make efficient use of the ‘deliverables’ to realise the intended benefits and generate value. This flow of work is primarily the responsibility of the project/program sponsor initially supported by project and program management, and then by organisational ‘line management’ until the final transition to ‘business as usual’ operations.

Developing a business case to the point where it can be accepted for investment is more complex, involves a wide spectrum of managers and potentially involves a number loops.

The three elements in this section of the overall ‘value chain’ are a viable strategic plan, a realistic business case that supports an element of the strategy and an effective portfolio management system to optimise the overall portfolio of projects and programs the organisation is capable of investing in.

The key is an effective and viable strategic planning process that is capable of developing a realistic strategy that encompasses both support and enhancements for business as usual, and innovation. Strategic planning is a complex and skilled process outside of the scope of this post – for now we will assume the organisation is capable of effective strategic planning.

The sign of an ineffective, unresponsive strategic planning process is seeing business cases fired off by business units without any reference to the strategic plan or worse projects being started without strategic alignment. The option to bypass the strategic planning may be valid in an emergency but not as a routine option. In a well disciplined value creation process, the portfolio management team simply reject business cases that cannot demonstrate alignment with the organisations strategic intentions. The red arrow in the diagram above simply should not be allowed to occur in anything other then an emergency situation.

The Portfolio/Strategic link (blue arrow)
There is a close link between the portfolio management processes  and strategic planning – what’s actually happening in the organisation’s existing projects and programs is one of the baselines needed to maintain an effective strategic plan (others include the current operational baseline and changes in the external environment). In the other direction, the current/updated strategy informs the portfolio decision making processes. The strategic plan is the embodiment of the organisation’s intentions for the future and the role of portfolio management is to achieve the most valuable return against this plan within the organisation’s capacity and capability constraints.

Routine inputs to the Strategic Plan (light green arrows)
The routine inputs to the strategic planning process come from the ‘organisation’ and include requirements, opportunities, enhancements and process innovations (eg, new software releases). These basic inputs are the core information required for strategic planning and form the majority of the new information in each update of the strategy.

The Innovation / Strategic Plan loop (light blue arrows)
This is the first of the more complex spaces – innovative ideas can come from anywhere in the business and are actively encouraged by leading organisations such as Google and 3M. Conversely, an organisational objective may require innovation to allow it to come to fruition. One of the most challenging objectives in recent times was Kennedy’s commitment to “before this decade is out, [land] a man on the moon and return him safely to earth.” The amount of scientific innovation required to achieve this objective was incredible.

The organisation’s governance processes and strategic development processes need to both encourage innovation whilst recognising that not every innovative idea will be appropriate for the overall development of the organisation. This requires the implementation of systems to encourage innovation, collect and sort innovative ideas and move the ‘right’ ideas into the strategic plan, where necessary revising and changing the plan to grab the innovative advantage.

The Feasibility loop (orange and yellow arrows)
Having innovative ideas and creative business cases is one thing, validating the feasibility of an idea is altogether different! The ability to test, validate and work-up innovative ideas into practical project specifications is a critical organisational capability. On mega projects the pre-feasibility and feasibility studies may in fact be significant projects in their own right involving considerable expenditure, feeding back to a gateway or portfolio management process to allow the next stage of the project to commence.

Several of the ‘gateways’ defined in most standard ‘gateway processes’ precede the commissioning of the main project and the organisation needs the capability to make informed decisions based on good quality information. This aspect of the value creation chain is industry specific and may be a central function or distributed across different business centres. What matters is the capability exists with the necessary skills to validate ideas and design projects ready for the more traditional project management processes to take over once the project is formally authorised.

Conclusion
The long term viability of any organisation depends on its ability to innovate. Traditional project and program management focus on doing the selected projects/programs ‘right’. But it is the ‘front end’ processes discussed in this post leading up to the investment decision that determine if the ‘right’ project is being selected for the ‘right’ reasons!

The effective governance of an organisation should require its management to invest sufficient skills and resources in these ‘front end’ processes to ensure a steady flow of innovative ideas, feeding into an effective and flexible strategic planning system, linked to a disciplined portfolio management process; to ensure the optimum mix of ‘right’ projects and programs are commissioned and supported.

Advising Upwards for Effect

The only purpose of undertaking a project or program is to have the deliverables it creates used by the organisation (or customer) to create value! Certainly value can be measured in many different ways, improved quality or safety, reduced effort or errors, increased profits or achieving regulatory compliance; the measure is not important, what matters is the work of the project is intended to create value. But this value will only be realised if the new process or artefact ‘delivered’ by the project is actually used by the organisation to achieve the intended improvements.

The organisation’s executive has a central role in this process. There is a direct link between the organisation’s decision to make an investment in a selected project and the need for the organisation to change so it can make effective use of the deliverables to generate the intended benefits and create a valuable return on its investment. The work of the project is a key link in the middle of this value creation chain, but the strength of the whole chain is measured by its weakest link – a failure at any stage will result in lost value.

In a perfect world, the degree of understanding, knowledge and commitment to the change would increase the higher up the organisational ladder you go. In reality, much of the in-depth knowledge and commitment is embedded in the project team; and the challenge is moving this knowledge out into the other areas of the business so that the whole ‘value chain’ can work effectively (see more on linking innovation to value).

To achieve this, the project team need to be able to effectively ‘advise upwards’ so their executive managers understand the potential value that can be generated from the initiative and work to ensure the organisation makes effective use of the project’s deliverables. The art of advising upwards effectively is the focus of my book ‘Advising Upwards’.

An effective Sponsor is a major asset in achieving these objectives, providing a direct link between the executive and the project or program. Working from the top down, an effective sponsor can ensure the project team fully understand the business objectives their project has been created to help achieve and will work with the team to ensure the project fulfils its Charter to maximise the opportunity for the organisation to create value.

Working from the bottom up, new insights, learning and experience from the ‘coal face’ need to be communicated back to the executive so that the overall organisational objectives can be managed based on the actual situation encountered within the work of the project.

The critical importance of the role of the sponsor has been reinforced by numerous studies, including the PMI 2012 Pulse of the Profession report. According to this report, 75% of high performance organizations have active sponsors on 80% of more of their projects (for more on the value of sponsorship see: Project Sponsorship).

If you project has an effective sponsor, make full use of the support. The challenge facing the rest of us is persuading less effective sponsors to improve their level of support; you cannot fire your manager! The solution is to work with other project managers and teams within your organisation to create a conversation about value. This is a very different proposition to being simply ‘on-time, on-scope and on-budget’; it’s about the ultimate value to the organisation created by using the outputs from its projects and programs. The key phrase is “How we can help make our organisation better!”

To influence executives within this conversation, the right sort of evidence is important; benchmarking your organisation against its competitors is a good start, as is understanding what ‘high performance’ organisations do. PMI’s ‘Pulse of the Profession’ is freely available and a great start as an authoritative reference.

The other key aspect of advising upwards is linking the information you bring into the conversation with the needs of the organisation and showing your organisation’s executive how this can provide direct benefits to them as well as the organisation.

In this respect the current tight economic conditions in most of the world are an advantage, organisations need to do more with less to stay competitive (or effective in the public service). Developing the skills of project sponsors so that they actively assist their projects to be more successful is one proven way to achieve a significant improvement with minimal cost – in fact, if projects are supported more effectively there may well be cost savings and increased value at the same time! And what’s in it for us as project managers? The answer is we have a much improved working environment – everyone wins!!