Monthly Archives: July 2009

Short termism -v- long term survival

Since being elected a Fellow of the Australian Institute of Management earlier this month, I have been receiving an interesting flow of new information. Two items in today’s reading are the results of an AIM survey that indicates 51% of managers believe that ‘short termism’ is a major issue of concern, 63% thought companies had a relatively short life span and 15% of company board members and CEOs surveyed were not confident their organisation would be in existence in 5 years time (source: AIM Surveys).

Contrast these views with the approach taken by one of Australia’s largest and oldest companies, BHP Billiton. BHP is preparing to spend $15 billion in South Australia to add an open-cut phase to its existing Olympic Dam underground mine. This development will involve digging more than 1 million tonnes of dirt a day for six years, before getting a dollar back. Certainly the production capability at the completion of the development in 16 years time will be massive. The ultimate aim is to boost annual uranium production at the mine from 4,500 tonnes a year to 19,000, copper from 235,000 tonnes to 750,000 and gold from 100,000 ounces to 800,000. Silver, produced as a by-product, will rise from 800,000 ounces to 2.9 million a year. At current prices that works out to annual mineral production valued at $6.2 billion (source: Forbes Asia Magazine dated July 13, 2009).

This raises two interesting thoughts. Firstly BHP must have immense confidence in the ability of its project and program managers to consistently deliver over the next 16 years. There is no easy exit point in the project – the pit needs to be 300 meters deep before encountering any of the ore body (the first six years work) and then there is the need for a series of expansions over the following 10 years to reach maximum output.

The second is the relationship between BHP and its stakeholders. The level of trust needed to accept the investment of $15 billion over 6 years in anticipation of a payback in later years is enormous. The only way this level of trust can be developed is through a long term process of effective stakeholder management linked to a track record of successfully delivering value (ie, keeping your promises).

I would suggest there are some interesting lessons to be learned from juxtaposing these two items. What do you think?

Be Lazy….. Be Happy

I have been dipping into a fascinating new book, The Lazy Project Manager kindly provided by its author, Peter Taylor.

This is not a book about managing projects…. it’s a book about managing yourself whilst you manage projects. The Lazy Project Manager is not intended to replace project management training manuals, courses, standards and other earnest but boring tomes. It’s the book you read when you are skilled at successfully running projects or programs and need to get a life outside of work as well.

Building on the ideas of Walter Chrysler and others ‘Whenever there is a hard job to be done I assign it to a lazy man he is sure to find an easy way of doing it.’; productive laziness is about achieving the success that matters with the minimum necessary effort. More bang for your buck!

Using a combination of humour from The Jungle Book (movie), Monty Python (and brontosauruses) and others, plus science from more reputable sources this is a fascinating read full of practical ideas.

To preview and buy visit: http://www.thelazyprojectmanager.com and you too may become productively lazy. Now all I need to do is find the time to finish reading it……

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

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.

PMI Launches the PMI Agile Community of Practice

The Agile Community of Practice is dedicated to raising awareness of Agile practices and techniques among PMI’s members. Its focus will be on building an emerging knowledge base using wikis, blogs and discussion threads. Plus additional resources include articles, tools and techniques, links to Agile project management literature and more. During the launch, membership is free to PMI members.

For more information see: http://www.pmi.org/GetInvolved/Pages/PMI-Specific-Interest-Groups.aspx

The collaborative management paradigm inherent in Agile – a new frontier

The Agile software development methodology has a fascinating range of ideas that can provide valuable learning’s to traditional project managers and in the wider sphere of stakeholder management.

Over the last few months I have been publishing a series of posts on this topic on the PMI Voices on Project Management blog. The key posts with a brief summary and links are:

Agile: The Great Debate
An overview of the Agile software development methodology and its impact on project management.

Creating Trust in Agile
Managing upwards, the trust and communication needed for Agile to succeed.

The Role of Agile Advocates
Agile advocates (AAs) need to understand their key stakeholders and empathize with their perceptions, fears and requirements.

The Gentle Art of Managing Agile
Applying the PMBOK to managing Agile projects.

Learning From Agile
The importance of customer engagement and going ‘light and lean’.

I invite you to read these posts and think on your project management and/or stakeholder management practices.

A Long Tail

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.

Long_Tail

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….

PRINCE3 remains PRINCE2®

The complete refresh of the PRINCE2® project methodology and credentials is over and the 2009 version has been released.

PRINCE2 is a project management framework which has wide acceptance in many government areas. The intellectual property of PRINCE2 belongs to the British Crown which has placed the methodology is in the public domain.

Projects in Controlled Environments explains the name and the operative word is ‘controlled’. The business remains in control of its projects and everything in the method can trace back to this fundamental principle. This means the methodology works well in environments where the same organisations is the client and the primary ‘performing organisation’ for the delivery of the project.

The 2009 refresh has:

  • Added 7 principles that were previously implied.
  • Changed 8 Components into 7 Themes (Configuration Management has become part of the Change Theme).
  • Reduced 8 Processes to 7. The former Planning process is dealt with as part of the Plans Theme. 
PRINCE2
For more on PRINCE2 see:  http://www.ogc.gov.uk
  • Added a new chapter on tailoring PRINCE2 to the environment in an attempt to reduce criticisms of the amount of bureaucracy involved in the methodology.
  • A Benefits Review Plan is now created as part of Initiating a Project and updated at end of each stage. Benefits Reviews may occur at the end of stages as well as after closure and the concept of dis-benefits has been introduced. Interestingly, the Senior User is held to account for the realisation of benefits (ie, the customer).
  • The Risk Management chapter has been rewritten to align with other OGC Standards. Response types cover opportunities as well as threats and a Risk Management Strategy introduced.
  • A smaller book focused on the needs of project sponsors ‘Directing Successful Projects with PRINCE2’ has been released.

The structure of PRINCE2:

The 7 principles which are considered universal and self-validating must exist in every project run according to PRINCE2. They are:

  1. Continued business justification
  2. Learn from Experience
  3. Defined Roles and Responsibilities
  4. Manage by Stages
  5. Management by Exception
  6. Focus on products
  7. Tailor to suit the project environment.

The 7 processes are outlined in the diagram above. Underlying these processes are the themes presented in the methodology and these amount to best practice in a project environment. They answer questions about what, why, who, when, how, how much and provide clarity. The Themes are:

  1. Business Case
  2. Organization
  3. Quality
  4. Plans
  5. Risk
  6. Change
  7. Progress

PRINCE2 -v- PMBOK

The primary difference between PRINCE2 and the PMI/ PMBOK® Guide view of projects is the boundaries. PMI (and most likely the new ISO21500) see a project starting when it is initiated by the client and completing once the outputs defined in the project charter are delivered. This is quite likely correct from a project practitioner’s perspective.

PRINCE2 sees the project starting much earlier and continuing through to the realisation of value by the organisation. This is quite likely correct from the perspective of an organisation initiating and managing internal projects.

There is very little difference in terms of the processes used to run a project between PRINCE2 and the PMBOK. What is different is PRINCE2 is totally focused on managing internal projects with organisational managers having a direct say in the management of the overall process and it provides an effective methodology for this circumstance. The PMBOK® Guide is a pure PM standard and has a more generic set of processes that can be adapted to a much wider range of circumstances and used in any situation (eg, a traditional project where the client contracts the project delivery organisation).

Which is best?  What do you think??

We will continue to focus on the PMI range of credentials with our training mainly because of their wider application. PRINCE2 works well in the right circumstances. Whereas, the PMI range of standards seem to apply to most circumstances. But I suppose that is the key difference between a methodology and a generic standard.