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.

Resourcing Schedules – A Conundrum 2

Following on from comments to my post ‘Resourcing Schedules – A Conundrum’  there are still some basic problems to resolve.

As the commentators suggest, KISS is certainly an important aspect of effective resource planning: ie, planning resources at an appropriate level of detail for real management needs. But the basic issues remain; you cannot rely on a scheduling tool to optimise the duration of a resource levelled schedule.

We use the basic network below in our Scheduling courses (download the network – or – see more on our scheduling training)

Network for Analysis (download a PDF from the link above)

No software I know of gets this one ‘right’.

When you play with the schedule, the answer to achieving the shortest overall duration is starting the critical resource (Resource 3) as soon as possible.

To achieve this Resource 2 has to focus 100% on completing Task B as quickly as possible BUT, Task C is on the Time Analysis critical path not Task B and 99% of the time software picks C to start before B.

This is not a new problem, a current paper by Kastor and Sirakoulis International Journal of Project Management, Vol 27, Issue 5 (July) p493 has the results of a series of tests – Primavera P6 achieved a duration of 709, Microsoft Project 744 and Open Workbench 863. Play with the resource leveling settings in P6 and its results are 709, 744, 823, 893 – a huge range of variation and the best option (P6) was still some 46% longer than the time analysis result . Other analysis reported in the 1970s and 80s showed similar variability of outcomes.

As Prof. George Box stated – All models are wrong, some are useful… the important question is how wrong does the model have to be before it is no longer be useful.

Computer driven resource schedules are never optimum, done well they are close enough to be useful (but this needs a good operator + a good tool). And good scheduling practice requires knowing when near enough is good enough so that you can use the insights and knowledge gained to get on with running the project. Remembering even the most perfectly balanced resource schedule will fall out of balance at the first update…..

How you encapsulate this in a guide to good scheduling practice is altogether a different question. I would certainly appreciate any additional feedback.

Resourcing Schedules – A Conundrum

I have recently been forced to think about the value of incorporating resources into schedules. At one level it’s not too hard to do, but is it useful?

From one aspect, it is impossible to schedule at any level without the active consideration of resources. Resources do the work in a given time and changing either the quality or quantity of the resource has some inevitable impact on duration. Consequently, it is critical to know the resource assumptions used in planning to validate the schedule and more importantly understand deviations from the plan during the execution of the work.

Generally what I mean by term ‘considered’ is the basic need to know the resources needed to undertake the work on every activity:

• At the feasibility stage big picture tied to the strategy for the project.
• At the contract stage to determine which tasks are the responsibilities of what contractor/subcontractor.
• At the weekly level, the supervisors need to know who is working where and when.

These decisions also need to be recorded and monitored. How much detail is recorded in the scheduling tool and what scheduling functions are used though is an altogether different question – this I refer to as ‘quantitative’ resource analysis.

Consideration is not the same as quantitative analysis within a scheduling tool. Quantitative resource analysis requires answers, or assumptions to be made, about a range of uncertain issues. Some of the nearly insoluble questions include:

1. There is no direct ‘straight line’ correlation between resource quantities and either task or project durations – there is a complex ‘J’ curve relationship and in some circumstances a negative correlation. For more on this see: The Cost of Time or for a more learned approach, The Mythical Man Month by Frederick P. Brooks Jr. originally published in 1975.
2. It is nearly impossible to define skill levels for people who will be employed on a project at some time in the future but we know a skilled worker can be far more productive than an unskilled worker. The skill of the worker changes the production rates and consequently the durations.
3. The other issue is the degree of motivation/moral of the people – a highly motivated team will always accomplish more than a ‘business as usual’ team and both more than a de-motivated workforce. Therefore the question of management and more importantly leadership also influence resource performance and therefore durations.

These unanswerable questions are complicated by the fact all scheduling software fails to optimally level resources . Basically the tools get it wrong the only question is how wrong: some are not too bad others unmitigated disasters. Resource scheduling needs both knowledge and common sense – no software applies common sense yet. But we have to plan resources – they need working space, accommodation, etc. And resources are the source of all cost expended on the project!

Another really interesting factor is the emerging understanding of the interaction between the schedule and the behaviour of people. IF the people believe the schedule represents a realistic approach to their work, they will (and do) modify their behaviours to conform to the schedule to be seen as successful. Obviously if resources are included in the schedule it is far more credible than if they are not. This was touched on in Scheduling in the Age of Complexity (read from p19 – the rest is not relevant and it’s a horribly long paper…. with a bit of luck this may turn into a book in a couple of years….).

So in conclusion I would suggest, consideration of resources is critical, as is having some form of method statement; together they dictate the planned durations of the work.

However, whilst using scheduling tools to calculate and level resource demands is useful, and can help gain valuable insights, you need real skill on the part of the scheduler and the right tools to achieve sensible results.

My feeling is the value of the process to the development of a realistic and achievable schedule depends on the circumstances of the project. Probably the biggest determinant of the value of quantitative resource analysis is the ease of adding to or reducing the resource pool. If this is easy, rudimentary quantitative analysis is all that’s needed, if any. If it is difficult to quickly change the resource pool far more rigour is required (eg, developing remote area mine sites in Australia). The quantitative analysis will still be ‘wrong’ but it is important to reduce the level error as much as possible.

This is a complex issue – what are your thoughts?

Project Planning

The Association for Project Management (UK) released it is ‘Introduction to Project Planning’ last year. This is a high level overview of all of the planning processes needed for a successful project outcome including scope, risk, cost, schedule, quality, procurement, resources and earned value (the subject of another APM standard).

The authors of this guide feel the discipline of planning is undervalued, its value is not recognised and the overall process is misunderstood by many in the project management community. I tend to agree!

The guide is a useful adjunct to both the APM BoK and the PMI PMBOK® Guide and is focused on the whole of the planning process. The first key message is planning has the most to contribute early in the project:

Planning Leverage during the Project Lifecycle

The second is the sequence the key questions good planning should answer, are asked in. If you don’t know ‘why’ the project is being undertaken it is nearly impossible to deliver valuable benefits at the end.

One element missing from the guide (but implicit in the way the guide is structured) is the very different skills needed by the planner during the concept phase of a project compared to the detailed planning and the maintenance phases. This is discussed in ‘The Roles and Attributes of a Scheduler’.

Overall the Guide is a useful addition to most libraries and fills a gap between the main BoKs and the specific scheduling and earned value guides.

Mathematical Modelling of Project Estimates

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.

Project Controls Don’t

Lynda Bourne has published an interesting post on the PMI Voices of Project Management blog. She suggests describing scheduling, Earned Value and financial management as ‘project controls’ is dangerous! The steering mechanism on a car is a control system, you move the steering wheel and the front wheels turn; and if the car is in motion its direction of travel is altered. Real control systems cause a change.

Altering the duration of a task in a schedule, or calculating the current CPI and EAC for an Earned Value report changes nothing. All you have is new data. If the data is going to cause a change three things must occur. First the data needs to be communicated to the right people. They need to receive, understand and believe the data (this changes the data into information). Then they need to use this new information to change their future behaviours.

Project plans are only useful if they are being used! If your plans are not regularly used by the project team I would suggest they are largely a waste of time. No one can change the past and it is always too late to change the present. The only value a ‘project control tool’ can offer is influence future actions and decisions. This requires relevant, focused information to be communicated to the right stakeholders at the right time – voluminous reporting is not communicating! Fantastically accurate, detailed reports will not be read by anyone important, they are (or should be) too busy doing useful things. To see Lynda’s thoughts on how to resolve this problem read her next Voices post (due in a couple of days).

For a more comprehensive analysis read the last part of Scheduling in the Age of Complexity, starting from page 17 – the role of a scheduler.

What do you think? Do project controls control anything??

The Scope of Change

This blog is going to try and link project and program management with change management and benefits realization.

As a start, the only point of undertaking a project or program is to realize some form of value. Benefit realization! To realize value, three elements need to be brought together:

1. There needs to be a new product or process created (an artifact);
2. People within the organization need to make effective use of the artifact to deliver a service;
3. The service as delivered needs to be accepted and used in the ‘market’.

The role of Strategic management and Portfolio management is to determine what services are likely to be accepted or needed by the market; a new shopping centre, an improved insurance package or simply a more efficient process to deliver information. These decisions will depend on the objectives of the organization, and is not the province of this blog.

The generally accepted role of project management is to create a unique product, service or result (an output) and the role of program management is to manage a group of related projects to achieve an outcome more efficiently than if the projects had been managed in isolation. Neither of these processes achieves real value in themselves. The realization of sustained value is achieved by the organization using the program’s outcome effectively over many months or years.

The Scope of Change Management

Projects and, to a greater extent, programs can realize some benefits, partially in the design and delivery of their respective outputs. Early benefits realization is frequently linked to ‘soft’ elements in the range of deliverables such as developing effective training, managing the transition to operations and ensuring a proper support framework is developed. Achieving these elements require the project/program team to really understand the requirements of their stakeholders. However, as demonstrated by the cost/benefit graph, benefits realization should continue for years after the program is finished and closed.

The extended timeline for value realization has important ramifications for organizational change management. Each project is an intense burst of change and the program absorbs these changes and has additional change effects of its own. These ‘activity related changes’ will include beneficial and negative impacts on a range of associated stakeholders. Some changes are disruptive caused by the execution of the work, learning curves, etc. Some changes positive caused by the improvements the projects and programs were initiated to deliver. Achieving a successful project/program outcome requires the effective management of these stakeholder communities, but the stakeolder management activity is essentially tactical.

The critical requirement to deliver sustained value is the organizational culture change needed to actively embrace the program’s outcomes and make valuable use of them. Embedding a culture change into an organization is a 2 to 3 year process as the change migrates from ‘new and threatening’, to ‘accepted (but the old way are still fondly remembered)’ to the ‘established old way’ things are done around here. This type of long term organizational change can only be accomplished by the organization’s line management supported by senior management. This is the realm of the program sponsor and executive management!

These ideas also have important ramifications for effective stakeholder management:

• Project level stakeholder management is relatively short term and focused on minimizing opposition to the work whilst ensuring necessary organizational support is in place to deliver the project’s outputs effectively. This is essentially tactical in nature.
• Program level stakeholder management has a wider view that needs to engage with the organizations strategic vision to ensure the program’s outcome is optimized to the changing circumstances within and around the organization. The key issue here is identifying and responding to changing stakeholder requirements, needs and expectations/perceptions over time; so as to optimize the value of the ‘outcome’ the project was established to deliver.
• Organizational level stakeholder management needs an even broader and longer term view focused on the strategic needs of the organization and its long term relationship with both internal and external stakeholders. Sustained value creation requires both the organizations internal staff and its external customers to jointly perceive the programs ‘output’ as valuable to them and also to perceive the organization favorably so they together maximize its use:
  • For a new shopping center with a 20 year lifespan this translates to retail tenants being willing to rent space and the ‘public’ seeing the shopping center as a ‘good place to shop’.
  • For a new call centre management system this translates into the call centre staff seeing the system as efficient and easy to use and clients of the business perceiving the system and staff as friendly, efficient and effective so they are happy to make repeated use of the system.

Conclusions

Change management and stakeholder management are closely aligned. Effective stakeholder management is essential for successful change management.

Change management and stakeholder management must start as soon as the project or program are initiated but should continue well after the project/program are completed.

The on-going organizational component of change management supported by strategic stakeholder management is critical if the real value of the outputs/outcomes created by the projects and program are to be realized.

Benefits realization is a line management responsibility starting with the project sponsor. All project and program managers can do is ensure their deliverables are crafted to facilitate and encourage benefits realization.