Prediction is very difficult!

“Prediction is very difficult, especially about the future” (Niels Bohr) but project managers, planners and estimators are continually expected to provide management with an ‘accurate prediction’ and suffer the consequences, occasionally even being fired, when their prediction proves to be incorrect.

What is even stranger, most project predictions are reasonably accurate but classed as ‘wrong’ by the ‘managers’ but the same managers are quite happy to believe a whole range of other ‘high priced’ predictions that are consistently far less accurate (perhaps we should change more for our services…).

There seems to be a clear divide in testable outcomes between predictions based on data and predictions based on ‘expertise’, ‘gut feel’ and instinct.

A few examples of ‘expert’ predictions that have gone wrong:

• Last January the Age Newspaper (our local) assembled its traditional panel of economic experts to forecast the next 12 months. 18 out of 20 predicted the Australian dollar exchange rate would remain below US$1. The actual exchange rate has been above US$1 for most of the last 6 months -10% correct, 90% wrong!
• The International Monetary Fund (IMF), the European commission, the Economist Intelligence Unit and the Organization for Economic Cooperation and Development all predicted the European economies would contract by $0.50 for every $1.00 reduction in government expenditure and therefore whilst painful, cutting deficit spending would be beneficial. The actual contraction has now been measured by the IMF at $1.50 contraction per dollar, and the reductions in deficit spending are creating more problems that they are solving, particularly in the Euro Zone.
• Most ‘experts’ predicted a very close race in the last USA Presidential election; the final result was 332 votes for Obama, 206 for Romney.

The surprising fact is that most ‘expert’ predictions are less accurate than a random selection – they are more wrong than pure chance! In his book ‘Expert Political Judgment: How good is it’ Philip Tetlock from Berkeley University tested 284 famous American ‘political pundits’ using verifiable tests (most of their public predictions were very ‘rubbery’). After 82,000 testable forecasts with 3 potential outcomes, he found the expert’s average was worse then if they had just selected a, b, or c in rotation.

The simple fact is most ‘experts’ vote with the crowd. The reward for ‘staying with the pack’ is you keep your job if you are wrong in good company – whereas if you are wrong on your own you carry all of the blame. There are several reasons for this; experts have reputations to protect (agreeing with your peers helps this), they operate within a collegiate group and know what the group believes is ‘common sense’, they are not harmed by their incorrect forecasts, and we are all subject to a range of bias that make us think we know more then we do (for more on bias see:
http://www.mosaicprojects.com.au/WhitePapers/WP1069_Bias.pdf
).

There are exceptions to this tendency; some forecasters got the USA election right and weather forecasters are usually accurate to a far greater degree than mythology suggests!!

During the 2012 election campaign, whilst the Romney camp was making headlines with ‘experts’ and supportive TV and radio stations predicting a very close contest, Drew Linzer posted a blog in June 2012 forecasting that the result would be 332/206 and never changed it and the New York Times ‘data geek’ Nate Silver also forecast the result correctly.

What differentiates weather forecasters, Linzer and Silver from the traditional ‘experts’ is the fact their predictions are driven by ‘data’, not expert opinion. Basing predictions on data requires good data and good, tested models. Elections are a regular occurrence and the data modelling of voter intentions has been tested over several cycles, forecasting weather is a daily event. For different reasons both sets of models have been the beneficiaries of massive investment to develop and refine their capabilities, the input data is reliable and measureable and the results testable. I suspect over the next year or two, the political pundit espousing their expert opinion on election results will go the same way as using seaweed or the colour of the sky to predict the weather, they will be seen as cute or archaic skills that are no longer relevant.

But how does this translate to predicting project or program outcomes?

• First cost and schedule predictions based on reliable data are more likely to be accurate than someone’s ‘gut feel’; even if that someone is the CEO! Organisations that want predictable project success need robust PMOs to accumulate data and help build reliable estimates based on realistic models.
• Second, whilst recognising the point above, it is also important to recognise projects are by definition unique and therefore the carefully modelled projections are always going to lack the rigorous testing that polling and weather forecasting models undergo. There is still a need for contingencies and range estimates.

Both of these capabilities/requirements are readily available to organisations today, all that’s needed is an investment in developing the capability. The challenge is convincing senior managers that their ‘expert opinion’ is likely to be far less accurate then the project schedule and cost models based on realistic data. However, another innate bias is assuming you know better than others, especially if you are senior to them.

Unfortunately, until senior managers wake up to the fact that organisations have to invest in the development of effective time and cost prediction systems and also accept these systems are better then their ‘expert opinion’ project managers, planners and estimators are going to continue to suffer for not achieving unrealistic expectations. Changing this paradigm will require PPPM practitioners to learn how to ‘advise upwards’ effectively, fortunately I’ve edited a book that can help develop this skill (see: Advising Upwards).

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!!

Who is a stakeholder?

A number of years ago, Paul Dinsmore quoted a trainee who defined a stakeholder as ‘one who holds the beef’. In many situations, a fairly accurate description!

During a trip to Paul’s second home in Rio de Janeiro last year, my wonderful hosts from PMI Rio, introduced me to professional steak-holders…… and the steak was good!

Which more than anything else defines the problem with communicating in English. Communication is not that simple even when using basic words sometimes spelled different but pronounced the same, stake -v- steak. Sometimes spelled the same but pronounced differently. Whilst you are mulling over this I will just take a minute to polish the Polish pewter I intend to present to a friend as a present (ie, give as a gift).

One of the key themes in my new book Advising Upwards is the different ‘languages’ used by managers at different levels of an organisation. Communicating effectively is a skilled art that needs practice and you need to speak in the language of the listener to achieve the greatest effect.

Project and Program Sponsorship

Effective sponsorship is a key element in the successful delivery of projects and programs; the way a sponsor interacts with the project and other managers can create or destroy value. The Mosaic White Paper Project Sponsorship describes the role of the sponsor as the link between corporate direction and accountability and the management of programs and projects. The sponsor transmits management information and decisions downwards to the project and represents the project in senior management circles, communicating important information upwards.

The organisation appoints the project sponsor who will normally be a senior manager with a relevant area of responsibility that will be affected by the outcome of the project and should be involved with a project or program for far longer than the appointed managers.

Improving project and program sponsorship will directly contribute to improved outcomes for the organisation. Surveys have consistently shown a strong positive correlation between the effectiveness of sponsors and the success of projects and programs. However, sponsorship does not exist in a vacuum, the organisation needs to ensure that their sponsors have appropriate support in terms of training, clear authority, access to decision makers and adequate resources. Success is created by the partnering of the sponsors senior management skills with the project manager’s technical knowhow.

This is the focus of an executive half day workshop we are developing for release in early 2011. For more information see:
http://www.mosaicprojects.com.au/Training-Sponsor.html

Advising Upwards

Your project will only be considered successful if its key stakeholders perceive the project’s outcome as a success. These perceptions of success or failure are heavily influenced by the effectiveness of the project’s communications, and relationships, with its stakeholder community, particularly senior managers. Communicating effectively is both a science and an art framed within a relationship.

The starting point if you wish to be taken seriously is to develop a reputation for credibility. Senior management need to recognise that if you say something, it is backed up by facts, and if you commit to something, it is delivered. Credibility is earned by performance, but there is no harm in quietly making sure your performance is noticed in the right places. Your reputation is a general underpinning to all internal organisational relationships. Developing a specific relationship needs a specific, culturally appropriate focus before you can expect to communicate effectively.

Also, the last few years have seen significant changes in people’s understanding of acceptable behaviours and have forced a re-evaluation of the way Project and Program managers need to communicate to influence their stakeholders; particularly when ‘advising upwards’ and dealing with difficult people. The first key to building any effective relationship is to avoid stereotyping. Upwardly mobile managers with a focus on being promoted, frequently have a different life focus to project managers. These differences are not uncommon in successful senior executives and need to be respected as a component in the relationship, not denigrated.

The second key is to recognise that in every relationship there is a power dimension. How a senior manager uses his or her power is to an extent a generational issue. As long as they understand their purpose, many younger managers would see nothing wrong in a more junior manager setting reasonable boundaries and procedures to the relationship and communication. Older managers used to operating in a command and control environment are likely to react negatively to a ‘junior’ pushing rules upwards.

The solution is mutuality. You need to understand what you need from the relationship (support, resources, backing) and also what the senior manager needs from the relationship. Then, work within the relationship to negotiate mutually beneficial outcomes that meet both sets of requirements. It is by linking your needs to the achievement of the senior manager’s requirements; you can start to achieve real communication.

As already mentioned, crafting advice to senior management to achieve effective outcomes from the communication is as much an art as a science. Communicating for effect requires a clear understanding of the objective of the communication and the skills to create messages that are focused:

• On the right people
• At the right time and carry
• The right information in the right format.

Mutuality and credibility are the two keys to advising upwards, but in the end, all relationships depend on the situation. If you are seen as a serious contributor to the organization’s success and can link your needs to the needs of senior management, there’s a high probability of achieving your desired outcome and benefiting the organization at the same time.

My next book, Advising Upwards: A Framework for Understanding and Engaging Senior Management Stakeholders, will be published by Gower in 2011. For more on the book see:
http://www.mosaicprojects.com.au/Books.html#AdvisingUpwards

In the meantime, our popular workshop, The science and art of communicating effectively will be run in Sydney and Melbourne over the next few weeks. For more information see:
http://www.mosaicprojects.com.au/Training-Comms.html