Entries categorized as ‘Complexity’
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.
Categories: Complexity · Risk · Stakeholder Management
Tagged: Benefits Realization, Communication, Complex Decision Making, Complex Decisions, complexity, Decision Making, probability, Project, Project Controls, Project Governance, Project Management, Project success, Stakeholder Management, Stakeholders
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.
Categories: Complexity · Scheduling · Training
Tagged: Communication, complexity, Complexity Theory, PMBOK, PMBOK Guide, PMI, PMI Standards, PMI-SP, probability, Project, Project Controls, Project Management, Project Management Training, Project success, Scheduling, Training, Webinar
I have just finished reading a very interesting paper by Dr. Pavel Barseghyan; Problem of the Mathematical Theory of Human work the paper is available from the PM World Today web site.
Dr. Barseghyan’s key message is the unreliability of historical data to predict future project outcomes using simple regression analysis. This is similar to the core argument I raised in my paper Scheduling in the Age of Complexity presented to the PMI College of Scheduling conference in Boston earlier this year. Historical data is all we have but cannot be relied on due to the complexity of the relationships between the various project ‘actors’. As a practitioner, I was looking at the problem from an ‘observed’ perspective it’s fascinating to see rigorous statistical analysis obtaining similar outcomes.
A counterpoint to Dr. Barseghyan’s second argument that improved analysis will yield more correct results is the work of N.N. Taleb particularly in his book ‘The Black Swan’. Taleb’s arguments go a long way towards explaining much of the GFC – models based on historical data cannot predict unknown futures. For more on this argument see: http://www.edge.org/3rd_culture/taleb08/taleb08_index.html
Personally I feel both of these lines of reasoning need to be joined in the practice of modern project management. We need the best possible predictors of likely future outcomes based on effective modelling (as argued by Dr. Barseghyan). But we also need to be aware that the best predictions cannot control the future and adopt prudent, effective and simple risk management processes that recognise each project is a unique journey into the unknown.
I would certainly recommend reading Dr. Barseghyan’s paper.
Categories: Complexity · Risk
Tagged: complexity, Complexity Theory, Estimating, probability, Project, Project Controls, Project Management, Scheduling
One of the key books that started my interest in risk, uncertainty and ultimately complexity theory was Against the gods: The remarkable story of risk written by Peter L Bernstein, and published in 1996 when Peter was aged 77! This book explained much of the history behind the development of risk management in a way that I could understand and is a recommended read for anyone involved in managing projects. Despite his success, Peter Bernstein never retired, and at the time of his death last month, aged 90, he was working on another book on risk. As authors go, a very long and distinguished career.
The limitations of the risk framework built in the 18th century and so clearly described in Bernstein’s book have been defined and expanded in recent times in The Black Swan by N.N. Taleb (another recommended read). Taleb’s ideas are discussed in my post Risky Business.
The major failing of traditional risk models is the issue of ‘boundaries’. Rules of probability such as The law of large numbers work if the population is bounded. The problem with project data is that there are no limits to many aspects of project risk. Consider the following:
- You plot the distribution and average the weight of 1000 adult males. Adding another person, even if he is the heaviest person in the world only makes a small difference to the average. No one weighs a ton! The results are normal (Gaussian-Poisson) and theories such as the Law of Large Numbers and Least Squares (Standard Deviation) apply.
- You plot the distribution and average the net wealth of 1000 people. Adding Bill Gates to the group causes a quantum change in the values. Unlike weight, wealth can be unlimited. Gaussian-Poisson theories do not apply!
Most texts and discussion on risk assume reasonable/predictable limits. Managing variables with no known range of results is rarely discussed and many project variables are in this category. For more on this see Scheduling in the Age of complexity.
Fortunately our colleague, David Hillson’s latest book Managing risk in projects will be published by Gower on 11 August 2009. This book is part of the Gower Foundations in Project Management series, and will provide a concise description of current best practice in project risk management while also introducing the latest developments, to enable project managers, project sponsors and others responsible for managing risk in projects to do so effectively. I would suggest another ‘must read’ if you are interested in project management.
More later….
Categories: Complexity · Risk · Scheduling
Tagged: Project Management, Project, Risk, Risk Management, probability, Taleb
As readers of this blog and our published papers would know I have a passing interest in complexity theory and its application to project management. This seems to be an expanding area of interest world wide.
Last night I was at the PMI Canberra Chapter presenting a summary of my paper ‘Scheduling in the Age of Complexity’ [download the paper] – another good reception for the ideas but more importantly several people in the audience were involved in parallel lines of enquiry. Possibly of most interest is the ideas of Graham Durant-Law see his blog at http://www.durantlaw.info.
Another interesting development is a new publication from PMI, Exploring the Complexity of Projects written by Svetlana Cicmil, Terry Cooke-Davies, Lynn Crawford and Kurt Richardson [see: http://www.pmi.org/Marketplace/Pages/Default.aspx] A quick skim suggests this is a comprehensive round up of the current state of complexity theory in project management. More on this once I have had a chance to read it.
What is gratifying is seeing the confusion created by the so called ‘College of Complex Project Managers’ and Prof. David Dombkins receding rapidly into obscurity. Rather than the confusion caused by the ‘college’ treating large complicated programs of work as a synonym for complexity theory (as Dombkins did in the original College manifesto); thought leaders world wide seem to be:
The work on understanding complexity in project management has a long way to go and will undoubtedly be the subject of future blogs. Your contribution to the discussion will be welcome.
Categories: Complexity · Project Typology
Tagged: complexity, Complexity Theory, PMI, Project, Project Management, project typology, Scheduling
Further to two earlier posts on the subject projects aren’t projects I have run across an interesting journal paper from Jon Whitty focused on Complexity.
A number of organisations are promoting the concept of ‘complex project management’; many other commentators, including me, feel complexity is a factor in every project. The elements of complexity theory include non linearity, emergence and unpredictability. In project management space, this translates to the interactions of people involved in and around the project to each other and to the project work (for more on this see A Simple View of Complexity in Project Management).
Jon’s paper reinforces the argument that projects have multiple dimensions and additionally projects and programs are quite different. Whilst there is likely to be a correlation between size and complexity, the two dimensions are not directly related! To read more see:
Categories: Complexity · Project Typology
Tagged: complexity, Complexity Theory, Program Management, Project, Project Management, project typology
Project management is not a one-size-fits-all process or discipline. The PMBOK® Guide makes this clear in Chapter 1. There are at least 4 dimensions of a project,
- its inherent size usually measured in terms of value;
- the degree of technical difficulty (complication) involved in the work;
- the degree of uncertainty involved in defining its objectives; and
- the complexity of the relationships surrounding the project.
Project Size
The size of the project will impact the degree of difficulty in achieving its objectives but large projects are not necessarily technically complicated or complex. There are projects in Australia to shift millions of cubic meters of overburden from mine sites with expenditures rising to several $million per day but the work is inherently simple (excavating, trucking and dumping dirt), and the relationships in and around the project are relatively straight forward. The management challenges are essentially in the area of logistics.
Technical Difficulty (degree of complication)
Complicated high tech projects are inherently more difficult to manage than simple projects. The nature of the technical difficulties and the degree of certainty largely depend on how well understood the work is. The important thing to remember with complicated work though is that systems can be developed and people trained to manage the complications. The work may require highly skilled people and sophisticated processes but it is understandable and solvable.
Uncertainty
The degree of uncertainty associated with the desired output from the team’s endeavours has a major impact on the management of the project. The less certain the client is of its requirements, the greater the uncertainty associated with delivering a successful project and the greater the effort required from the project team to work with the client to evolve a clear understanding of what’s required for success. This is not an issue as long as all of the project stakeholders appreciate they are on a journey to initially determine what success looks like, and then deliver the required outputs. Budgets and timeframes are expected to change to achieve the optimum benefits for the client; and the project is set up with an appropriately high level of contingencies to deal with the uncertainty. Problems occur if the expectations around the project are couched in terms of achieving an ‘on time, on budget’ delivery when the output is not defined and the expected benefits are unclear. Managing uncertainty is closely associated with and influences the complexity of the relationships discussed below.
Complexity = The People
Complexity Theory has become a broad platform for the investigation of complex interdisciplinary situations and helps understand the social behaviours of teams and the networks of people involved in and around a project. These ideas apply equally to small in-house projects as to large complicated programs. In this regard, complexity is not a synonym for complicated or large. It focuses on the inherent unpredictability of people’s actions and reactions to ideas and information within the network of relationships that form in and around the project team.
Discussion
Size is straightforward and most organisations have processes for assigning more experienced project managers to larger projects. What’s missing is consideration of the other three aspects.
The last item, complexity is very much an emerging area of thought and discussion. For a brief overview see: A Simple View of ‘Complexity’ in Project Management and for some practical considerations of the impact of complexity theory on scheduling see: Scheduling in the Age of Complexity. However, I expect it will be some years before ‘complexity theory’ and project management sit comfortably together.
Of more immediate interest is the interaction of uncertainty and technical difficulty. Knowing both ‘what to do’ and ‘how to do it’; or more importantly knowing how much you know about these two elements is critically important in establishing a framework to manage a project. Some ideas on this topic will be the subject of my next post.
Categories: Complexity · Project Typology
Tagged: complexity, Complexity Theory, Project, Project Governance, Project Management, Project success, project typology, uncertainty
Pat Weaver
Lynda Bourne