Construction CPM 2013

Tennessee Williams once said “America has only three cities: New York, San Francisco, and New Orleans. Everywhere else is Cleveland.”  Having now been to all four places I can understand the sentiment.

As I write this, the Construction CPM 2013 conference is in full swing and is proving as dynamic as its host city of New Orleans. A strong line-up of speakers focusing on the tools, techniques, art and science of critical path management is supported by an equally diverse and interesting social program.

Many of the interesting concepts and ideas we have encountered will undoubtedly be finding their way into our thinking and writing over the next few months, whilst the papers we have presented so far have been well received with one to go tomorrow. Our presentations are available from:

• Controls Communicate?
• Avoiding the ‘Tipping Point to Failure’
• Estimating Fallacies – excessive detail does not help  

It’s not all hard work! The networking and social program are always a highlight of Construction CPM and when you overlay the excitement of the French Quarter of New Orleans and you start to really challenge the stamina. The final event last night was a ‘Bourbon on Bourbon Street’ tonight its jazz in ‘Fred’s Nightclub’, both finishing at midnight!

If you are involved in project controls start planning for 2014! If the USA is too far to travel, we have a local Governance and Controls Symposium coming up in Canberra in the 10th April.

Looking to earn PDUs / CPD in a great learning environment?

A few interesting options to consider:

1. The Construction CPM Conference in New Orleans – http://www.constructioncpm.com/
   Its not too late – we fly out Thursday to enjoy a couple of days in the ‘Big Easy’ before the kick off Sunday evening (27th Jan.)
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2. The Project Zone Congress in Frankfurt 18th & 19th March – http://www.projectzonecongress.org
   One of Europe’s leading international conference and the good news – readers of this blog can claim a 10% discount by enter the code PZ2012_MEDIA02E0AC81 into the discount code field.
   I cannot make this year but we are planning on being there in 2014.
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3. A specialised and highly focused Governance and Controls Symposium to be held in Canberra on 10th April - http://wired.ivvy.com/event/GCSM13/. The call for papers still open and if you are serious about the contribution of project controls to value creation this is a must be at event.
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4. Later in the year PMOz in Melbourne, 17th & 18th September – Australian’s best PM networking conference – http://www.pmoz.com.au/

PMBOK® Guide 5th Edition now in stock

Stocks of the new PMBOK® Guide 5^th Edition, the Standard for Program Management 3^rd Edition and the Standard for Portfolio Management 3^rd Edition are now in Australia. These updated standards continue PMI’s efforts to enhance their suite of international standards to remain at the forefront of project management standardisation.

We will be posting more comments after a careful read.  Some initial thoughts are in two earlier posts:
PMBOK 5th Edition some key changes #1
The 5th Edition of the PMBOK gets communication!

For more information and to order these new PMI standards for free delivery in Australia visit: http://www.mosaicprojects.com.au/Books.html#PMI

Note: These new PMI standards are not required for current examinations – PMI will be updating their examinations in Q3 of 2013 to align with the standards and we will be updating our PMP, CAPM and PMI-SP training in Q2 in readiness for the change over.

Value is created by embracing risk effectively

The latest briefing from the real ‘Risk Doctor’, Dr David Hillson #75: RESOLVING COBB’S PARADOX? starts with the proposition: When Martin Cobb was CIO for the Secretariat of the Treasury Board of Canada in 1995, he asked a question which has become known as Cobb’s Paradox: “We know why projects fail; we know how to prevent their failure – so why do they still fail?” Speaking at a recent UK conference, the UK Government’s adviser on efficiency Sir Peter Gershon laid down a challenge to the project management profession: “Projects and programmes should be delivered within cost, on time, delivering the anticipated benefits.” Taking up the Gershon Challenge, the UK Association for Project Management (APM) has defined its 2020 Vision as “A world in which all projects succeed.” The briefing then goes on to highlight basic flaw in these ambitions – the uncertainty associated with various types of risk. (Download the briefing from: http://www.risk-doctor.com/briefings)

Whilst agreeing with the concepts in David’s briefing, I don’t feel he has gone far enough! Fundamentally, the only way to achieve the APM objective of a “world in which all projects succeed” is to stop doing projects! We either stop doing projects – no projects – no risks – no failures. Or approximate ‘no risk’ by creating massive time and cost contingencies and taking every other precaution to remove any vestige of uncertainty; the inevitable consequence being to make projects massively time consuming and unnecessarily expensive resulting in massive reductions in the value created by the few projects that can be afforded.

The genesis of Cobb’s Paradox was a workshop focused on avoidable failures caused by the repetition of known errors – essentially management incompetence! No one argues this type of failure should be tolerated although bad management practices mainly at the middle and senior management levels in organisations and poor governance oversight from the organisation’s mean this type of failing is still all too common. (for more on the causes of failure see: Project or Management Failures )

However, assuming good project management practice, good middle and senior management support and good governance oversight, in an organisation focused on maximising the creation of value some level of project failure should be expected, in fact some failure is desirable!

In a well-crafted portfolio with well managed projects, the amount of contingency included within each project should only be sufficient to off-set risks that can be reasonably expected to occur including variability in estimates and known-unknowns that will probably occur. This keeps the cost and duration of the individual projects as low as possible, but, using the Gartner definitions of ‘failure’ guarantees some projects will fail by finishing late or over budget.

Whilst managing unknown-unknowns and low probability risks should remain as part of the normal project risk management processes, contingent allowances for this type of risk should be excluded from the individual projects. Consequently, when this type of risk eventuates, the project will fail. However, the effect of the ‘law of averages’ means the amount of additional contingency needed at the portfolio level to protect the organisation from these ‘expected failures’ is much lower than the aggregate ‘padding’ that would be needed to be added to each individual project to achieve the same probability of success/failure. (For more on this see: Averaging the Power of Portfolios)

Even after all of this there is still a probability of overall failure. If there is a 95% certainty the portfolio will be successful (which is ridiculously high), there is still a 5% probability of failure. Maximum value is likely to be achieved around the 80% probability of success meaning an inevitable 20% probability of failure.

Furthermore, a focus on maximising value also means if you have better project managers or better processes you set tighter objectives to optimise the overall portfolio outcome by accepting the same sensible level of risk. Both sporting and management coaches understand the value of ‘stretch assignments’ – people don’t know how good they are until they are stretched! The only problem with failure in these circumstances is failing to learn and failing to use the learning to improve next time. (For more on this see: How to Suffer Successfully)

The management challenge is firstly to eliminate unnecessary failures by improving the overall management and governance of projects within an organisation. Then rather than setting a totally unachievable and unrealistic objective that is guaranteed to fail, accept that risk is real and use pragmatic risk management that maximises value. As David points out in his briefing: “Projects should exist in a risk-balanced portfolio. The concept of risk efficiency should be built into the way a portfolio of projects is built, with a balance between risk and reward. This will normally include some high-risk/high-reward projects, and it would not be surprising if some of these fail to deliver the expected value.”

Creating the maximum possible value is helped by skilled managers, effective processes and all of the other facets of ‘good project management’ but not if these capabilities are wasted in a forlorn attempt to ‘remove all risk’ and avoid all failure. The skill of managing projects within an organisation’s overall portfolio is accepting sensible risks in proportion to the expected gains and being careful not to ‘bet the farm’ on any one outcome. Then by actively managing the accepted risks the probability of success and value creation are both maximised.

So in summary, failure is not necessary bad, provided you are failing for the ‘right reason’ – and I would suggest getting the balance right is the real art of effective project risk management in portfolios!

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).

Why are schedules failing?

There seems to be fairly wide consensus that the modern practice of scheduling is not delivering the results needed to help projects succeed.

My feeling is that with a few notable exceptions the underpinning ideas of the Critical Path Method (CPM) of scheduling developed in the 1950s and 60s have been forgotten and most software and most scheduling practice uses ideas from the 18th century.

The concept of Bar Charts was developed in the 18th century (or possibly earlier). Joseph Priestley (1733-1804) published his ‘Chart of Biography’:

He is quoted as saying “…a longer or a shorter space of time may be most commodiously and advantageously represented by a longer or a shorter line.”

A few years later a full range of modern charts were published by William Playfair (1759-1823) in his ‘Commercial and Political Atlas’ of 1786:

By the end of the 19th century sophisticated barcharts appear to have been in general use (at least in Europe – the project below was built in 1910):

For more on the early development of scheduling see A Brief History of Scheduling.

Henry Gantt developed his production management systems for factories in the early part of the 20th century with a range of charts designed as production monitoring and control tools:

Importantly Gantt did not use simple bar charts and had no interest in one-off projects. He was focused on machine shop efficiency and production quotas:

For more on his work see: Henry L. Gantt – A Retrospective view of his work.

CPM and PERT were invented in 1957 as computer based analytic models:

Importantly, in both systems, planning the logic and entering the information into the computer precedes calculating the schedule. Both CPM and PERT used ADM networks:

The ‘precedence diagram’ (PDM) network was published in 1961 as a simplified manual process to make CPM available to people without access to expensive mainframe computer time – in the PDM system as published drawing the logic diagram also precedes calculating the schedule.

There is no question CPM offered significant advantages over the traditional bar charts that had been in use for more that 100 years. In my view, the major advance that generated the improved project outcomes was the need to think through the work logically, focusing on the activities and sequence of work before any attempt to schedule the project was possible. This was equally true of both the mainframe systems and the manual systems in use through the 1960s and 70s. James Kelley (co-inventor of CPM) had a very similar view.

The same concept of good practice is embedded in the PMBOK® Guide. The separate processes in the 5th Edition are:
6.1 – Plan schedule
6.2 – Define Activities
6.3 – Sequence Activities
6.4 – Estimate Resources
6.5 – Estimate Durations
6.6 – Develop Schedule
6.7 – Control Schedule

CPM was recognised as an improvement on bar chart planning! So my question is: If CPM scheduling is supposed to be a logical process why do so many scheduling tools default to, and planners work from, 250 year old Bar Charts? Is this the cause of scheduling failures?

There are tools around that default to creating the schedule logic in a network diagram but they are in the minority. I will be discussing one of these at the Construction CPM conference in New Orleans later this month (see: http://www.constructioncpm.com/). Micro Planner X-Pert is a true CPM System that supports the PMBOK® Guide schedule development process:

And lets you chose the networking style PDM or ADM:

For more on Micro Planner see: http://www.microplanning.com.au/

But back to the key question, is scheduling failing through lack of skills and training, a lack of knowledge, poor techniques focused on 250 year old bar charts or some other reason?

The 15,000 articles a month downloaded from our planning resource page, suggest a strong interest in planning and scheduling but this interest does not seem to be reflected in the status or planners or project outcomes. I look forward to the discussions….

The need for Governance and Project Controls

Brisconnections’ airport link, the Sydney Cross City Tunnel and 1000s of other projects are set up to fail through bad forecasting and estimating! Professor Bent Flyvbjerg, a leading international expert in the management of major projects, claims ‘the majority of forecasters are fools or liars’ and their forecasts misinform decision makers on projects instead of informing them.

Flyvbjerg’s new paper ‘Quality control and due diligence in project management: Getting decisions right by taking the outside view’ that is ‘in-press’ for publication in the International Journal of Project Management next year, defines the problem and proposes an ‘eight step’ solution.

The governance and control’s failures highlighted in this paper and the Saїd Business School, University of Oxford, press release (read the release) underpins the importance of the Governance and Controls Symposium on the 10th April in Canberra.

It is impossible to govern effectively if the information being provided from the controls systems is inaccurate or incorrect. But it is a governance responsibility to ensure adequate resources are invested in the organisation’s ‘controls systems’ and the organisation’s culture is attuned to requiring good data. The Symposium looks at how these two-sides-of-the-same-coin can be better understood. To be part of this important event either as a presenter, supporter or delegate, visit the symposium website.

Henry Gantt – Debunking the myths

It may come as a big surprise to many, but Henry L. Gantt did not invent bar charts despite many people miss labelling them ‘Gantt Charts’ and he had nothing to do with developing project management!

This definitive paper highlights the origins of bar charts in Scotland in the 18th century and looks at Gantt’s real work in manufacturing – when you have finished reading it, I hope you will agree the following myths should be ‘busted’ once and for all:

Misconception #1 Henry Gantt developed ‘Bar Charts’ – Fact, bar charts were developed 100 years before Gantt, his charts were sophisticated production control tools, not simple representations of activities over time.

Misconception #2 Henry Gantt contributed to the development of ‘project management’ – Fact, Gantt’s work was in machine shops and factories focused on batch production and factory throughput. Many of his ideas can be adapted to modern project management but Gantt sought to eliminate ‘one-off’ jobs that could not be batched and managed efficiently.

Read the full paper in the December edition of PM World Journal at: http://pmworldjournal.net/?article=henry-l-gantt-1861-1919-debunking-the-myths-a-retrospective-view-of-his-work

Launch of the Project Time Management Qualification (PTMQ) Framework in Australia

The free CIOB event scheduled for the 15th November in Melbourne will be the de facto launch of the CIOB PTMQ Framework in Australia covering the various routes to the Project Time Management Certificate (PTMC) examination. Depending on interest, training courses and examinations can be organised wherever there are sufficient numbers.

The PTMC has no prerequisites – whist the examination is rigorous, formal training courses are optional, experienced schedulers in particular may choose the self-study option.

The PTMQ framework is part of an overall strategy developed by the CIOB to improve project outcomes and address widely held misconceptions about the role of effective time management within project management.

As a starting point, effective time management, the courses and the credentials have nothing to do with tools. In exactly the same way a car is a means for a skilled driver to implement his/her objective, scheduling software is a means for a skilled scheduler to implement effective time management. Unfortunately most schedulers are taught how to run tools and virtually nothing about what planning and scheduling is supposed to achieve.

We all know a significant proportion of projects run late and many that finish on time have been de-scoped. The process led by the CIOB has been focused on defining the problem and building practical solutions to address these issues that cause $billions to be wasted on projects every year. The overall solution that is nearing completion includes:

• Publication in 2011 of the CIOB Guide to the management of time in complex projects.
• Development of a new form of contract for complex projects due for publication later this year.
• Development of the PTMQ framework, officially launched on the 1st November
• Running a sustained campaign to raise awareness of the importance of effective time management in achieving value from an investment in a project.

PTMC fills a major void in the publicly available project management qualifications. The certification tests a persons understanding of effective time management and is designed for people entering a project scheduling role. For the first time project managers, PMO managers and HR departments can require an impartial assessment of a job candidates understanding of the role of project scheduling in the successful delivery of projects!

Existing ‘time management’ qualifications either require years of experience prior to the candidate being eligible to sit the examination or are tools focused and simply certify the person knows how to ‘push buttons’ to make the designated software ‘go’.

PTMC complements these existing qualifications at the entry level, focusing on the objectives of good scheduling practice to support tools focused skills (you cannot do effective scheduling without the tools). Additionally, PTMC provides a stepping stone towards the more advanced certifications either within the CIOB framework or others such as the PMI-SP.

If you are based in Melbourne we look forward to seeing you on Thursday 15th November, to register and anyone else interested in this exciting development see: http://www.mosaicprojects.com.au/Training-CIOB-TM_Credential.html

CIOB launches Project Time Management Certificate

The Chartered Institute of Building has launched its Project Time Management Qualification (PTMQ) framework upon which the CIOB will assess and accredit Project Time Management professionals placing CIOB at the forefront of establishing the premier industry standard in planning, scheduling and project control.

The first element of the framework, the Project Time Management Certificate (PTMC) was launched at a gala function in London, by the CIOB President last week. Unlike existing certifications, this qualification is focused on assessing the candidates knowledge of practical project time management.   It is designed for new entrants to planning and scheduling as well as those who are already engaged in the management of time on projects. Holders of the PTMC will have demonstrated a rigorous understanding of the practice that underpins project planning and scheduling.

The launch of the PTMQ framework moves CIOB one step close to completing a five year strategy to provide standard education, training and accreditation in time management.

Back in 2008 CIOB research found that 67% of complex building projects were late. Of those delayed 13% were more than 3 months and 18% over 6 months. This finding prompted the CIOB to embark upon the development and publication in 2011 of the CIOB Guide to Good Practice in the Management of Time in Complex Projects which sets down the process and standards to be achieved in preparing and managing a time model.

The Guide underpins the new CIOB contract for the management of complex projects due for publication later this year, and the PTMQ framework for assessing and accrediting the Project Time Management professionals required as part of the CIOB contract.

The PTMC examination is open to CIOB members and non-members, those who have gone through Project Time Management training or those who have self-studied. It will appeal to anyone looking for a relevant and credible qualification in project time management. And in combination with the forthcoming Practitioner (PTMP) and Specialist (PTMS) credentials, it will offer a project time management qualification structure that will provide a progressive development path based on assessment of skills, knowledge and experience in planning, scheduling and project controls.

Mosaic is the exclusive CIOB partner for delivery of training in Australia and New Zealand, with rights to deliver training throughout the wider region. We are currently working on a planned series of public workshops and examinations commencing in Q1 of 2013. Courses and/or examinations can also be arranged for organised groups. For more information on this exciting development see: http://www.mosaicprojects.com.au/Training-CIOB-TM_Credential.html

UK and European readers contact: http://www.athenaprojectservices.com/