# Monthly Archives: October 2015

## Scheduling Acronyms – use the correct terms!

Critical path scheduling has only been around for 60 years, is well documented by the originators of the discipline and central to the practice of project management. However, through ignorance, overt commercialism or laziness, far too many scheduling professionals continue to confuse the terms and degrade the practice.

If we can’t use the same correct term consistently for a function or process in scheduling why should anyone else take us seriously. The originators of the various concepts knew what they called each of the items discussed below, it is both professional and polite to respect their intentions and legacy.

CPM = Critical Path Method. (Also called CPA – Critical Path Analysis) This term emerged in the 1960s to describe the two variants of CPM, ADM and PDM. CPM uses a single deterministic duration estimate for each activity (or task) to calculate the schedule duration, activity start and finish dates, various floats and the ‘critical path’. CPM focuses on the activities.

ADM = Arrow Diagramming Method. Also called AOA (Activity on Arrow).  ADM was the first of the CPM techniques developed by Kelley and Walker in 1957.  This style of network diagramming has largely faded from use.

Activity-on-Arrow Diagram

PDM = Precedence Diagramming Method. Also called AON (Activity on Node).  PDM was the second of the CPM techniques developed by Dr. John Fondahl, and published in 1961.  PDM is the standard form of CPM networking used today.

Precedence diagram

PERT = Programme Evaluation Review Technique. PERT was developed by the US Navy in 1957 in parallel with CPM and used an identical ADM network.   PERT differentiates from CPM in several ways.  Its focus in on the probability of achieving an event (eg, the completion of a phase or activity), the expected duration of each activity is calculated from three time estimates using a ‘modified Beta distribution’ (optimistic, most likely and pessimistic).  The ‘PERT Critical Path’ is calculated using the ‘expected’ durations and very simplistic probability assessments can be made based on the variability in the three estimates (but only on a single path).  PERT calculations for the ‘expected’ durations can be applied to PDM networks but are only of value if all of the links are ‘Finish-to-Start’. PERT is simplistic and significantly less accurate than the modern Monte Carlo analysis. For more on this see: Understanding PERT.

Summary

Calling any deterministic CPM schedule a PERT Chart is simply wrong; PERT is defined by three time estimates! Using PERT when you could use Monte Carlo is stupid – the information generated is less accurate. And inventing new names for existing processes is confusing and damaging.

## CIOB QEII Award – RMIT University Melbourne

Last week I had the honour of representing CIOB at the RMIT University, School of Property, Construction and Project Management, Annual Industry Research and Awards Night (Melbourne, Australia).  I was there to present the CIOB QEII Award to Chris Mikha, the CIOB Student member who achieved the highest average over the Construction Technology course in the RMIT Bachelor of Applied Science (Construction Management).

The element of the evening that most impressed me was the breadth and depth of research undertaken by the School’s Honours students. As part of the final year research component of the Degree, the students produce create a poster as an info-graphic highlighting their research findings. Looking at the quality of the posters, out industry has a lot of talent joining its ranks!

The other key impression left on me was the success of the annual CIOB Global Student Challenge, Chris’s team missed out on a place in Hong Kong this year by a small margin but he though the challenge was one of the most important leaning experiences of his entire course. The decision by CIOB to take the game ‘global’ a few years back has certainly paid off!

Overall a very successful night all round.

## Governance processes and terminology

Governance uses a number of terms, this blog is designed to provide a set of referenced definitions for the different terms and suggest a hierarchy for use by an organisation’s governing body.

Defining Organisational Governance

Governance:  The use of influence or power to direct, control and regulate the actions and affairs of others. Organisational Governance, developing systems and using influence to direct, control and regulate the actions of the organisation’s management and staff (see: Defining Governance).

Governing: The action of using authority to direct, control and regulate an organisation; and taking responsibility for the performance and conformance of the people within the organisation.

Governing body: the person, group or entity accountable to the organisation’s owners, and the wider stakeholder community, for the performance and conformance of the organisation they govern (eg, a corporation’s Board of Directors).

Conditions Precedent

The conditions needed for developing and implanting an effective governance paradigm are for the governing body to determine the objectives of the organisation and understand the concepts of good governance.

Objective:  A specific result that the organisation aims to achieve within a time frame, using available resources; a goal or target to be achieved. The organisation’s objectives are derived from its vision and mission statement; apply to both the organisation and its governance, and underlie its strategic planning activities. Objectives should be specific and measureable.

Concept:  An abstraction or generalisation from experience or the result of a transformation of existing ideas.  The concept is reified (made real) by all of its actual or potential instances, whether these are things in the real world or other ideas and mediates between thought, language, and referents.

The members of the governing body need to reach consensus on their view of ‘good governance’, in the context of their organisation’s purpose and objectives before being able to move to more concrete developments. Implementing ‘good governance’ requires the creation of an effective framework within the organisation supported by the documentation of the organisations governance objectives.

The Governance Framework

Governance Framework: The system through which the organization’s governance arrangements operate including the management structures, enabling factors and interfaces through which the work of the organisation’s management is directed and controlled and regulated.

Whilst the governing body retains overall accountability for governance, some of the functions required to implement governance throughout the organisation may be delegated to managerial staff or organisational entities under the supervision and control of managerial staff. These delegated governance roles, their responsibilities, authority and interrelationships must be clearly defined; as well as the decision making, oversight, and points of involvement and intervention retained by the governing body. (see: Governance Systems & Management Systems)

Functions: The purpose the system has been created to fulfil or undertake; the purpose of the system.

The function of governance is to establishing the organisation’s objectives, ethics and culture; develop a framework that can implement these factors and require appropriate oversight and assurance processes (see: The Functions of Governance).

The function of management is to use the organisation’s human and other resources to achieve its objectives; working within the parameters set by the governing body (see: The Functions of Management).

Governance functions and management functions may be performed at different levels and in different parts of the organisation, but everyone involved in governance and management have a shared responsibility to work proactively towards achieving the objectives of the organisation; and the governing body remains accountable for the performance and conformance of the organisation.

Documenting governance objectives

The objectives, the governance framework is to implement, need to be defined and documented. The starting point is the concepts of ‘good governance’ agree by the members of the governing body. The concepts need to be ‘made real’ in the form of a set of principles that encapsulate the values, ethics and cultural objectives the governing body intend the organisation to embody (see: Ethics and Leadership). These principles are the further refined and defined in a set of policies, procedures and methodologies.

Principle: A fundamental truth or proposition that serves as the foundation for a system of belief or behaviour or for a chain of reasoning.  These are the fundamental propositions that define the way the system of governance will operate, and acceptable behaviours for the organisation.

Policy: A document describing what is to be done in particular situation that has been agreed by the organisation’s governing body and management. Policies are clear, simple statements of how the organisation intends to implement its governance principles, and are intended to influence and determine decisions, actions, and other matters.  Policies will frequently link to externally imposed obligations such as laws preventing the bribery of foreign officials. In addition to the policy statement, guidelines may be issued to assist in the implementation of the policy.

Guidelines: A recommended practice that allows some discretion in its interpretation, implementation, or use, intended to assist in achieving a policy outcome or streamline a particular processes according to a set routine or sound practice.

Procedure: An established way of doing something, a series of actions conducted in a certain order or manner.  Procedures document and describe how each policy (or element of a policy) will be put into effect within the organisation. Each procedure should outline:
–  Who will do what
–  What steps they need to take (see: The value of Standard Operating Procedures).

Each procedure may require specific practices or processes to be used to ensure a consistent outcome.

Practice: A method or rule used in a particular field or profession.

Process: A series of actions or steps taken in order to achieve a particular end. Each process takes a set of inputs, and applies defined tools and techniques in a methodological way to the inputs to create outputs.

A series of procedures (plus practices and processes) can be grouped together into a workflow, or methodology.

Methodology: A sequenced series of procedures for delivering an outcome (see: Methodologies). Methodologies describe:
–  What should be done;
–  When it should be done;
–  Who should do the work; and
–  How the work will be accomplished.

In a well governed organisation, it governance principles will influence the design of every methodology, process and procedure used in the conduct of its business.

## Guild of Project Controls Compendium and Reference (GPCCAR)

The global community of time and cost practitioners / managers are collaborating to develop The Guild of Project Controls Compendium and Reference (GPCCAR) .  The GPCCAR is a suite of process-based documents that demonstrate what 1000’s of contributors believe constitutes Project Controls.

The GPCCAR is intended to be an evolving global statement as to what we, the practitioners, believe constitutes our role as “project controllers”. The exciting part is that anyone with an opinion (and justification) is free to propose amendments and additional references.

The first section has been released; each week ‘The Guild’ be releasing the next module. At the footer of each of the Modules there are details of how you can get involved to change or improve upon this initial baseline.

To access the GPCCAR see: http://www.planningplanet.com/guild/GPCCAR/

Registration is required, membership of the Planning Planet web community (free – you just need to create a profile), or the Guild of Project Controls.

The Guild of Project Controls will be using the GPCCAR to underpin its emerging project controls certification framework.

## Governance and ethics

Back in June I posted on Governance and Stakeholders focusing on the damage institutions were doing to their stakeholders through on-going governance failures.  Two of the organisations discussed (not for the first time) were the CBA Bank’s ongoing financial advice crisis and FIFA’s corruption, both on-going scandals.

Press articles over the last few days show neither of these problems is being well managed from either the institutions’ perspective or their customers’/stakeholders’ perspectives. The on-going sagas suggest the root cause of the problems is very much a governance failure, but in areas not previously discussed.

The Six Functions of Governance are:

1. Determining the objectives of the organisation;
2. Determining the ethics of the organisation;
3. Creating the culture of the organisation;
4. Designing and implementing the governance framework for the organisation;
5. Ensuring accountability by management;
6. Ensuring compliance by the organisation.

This post will demonstrate the importance of functions 2 and 3.

Starting with FIFA: the stated objective of FIFA is to further the development of soccer (football) world-wide. A noble objective!  However, to a large extent the culture and ethics within FIFA have become focused on individuals obtaining and retaining personal power for the benefit of the ‘powerful person’ – they may believe they are the best possible person for the job, but the evidence suggests otherwise! The use of FIFA’s resources by people in power to achieve this end has already been well documented and whilst of themselves these actions are not necessarily wrong, they have certainly led to a number of high profile prosecutions for corruption. I would suggest the ethical breakdown was driven by the toxic culture focused on achieving and retaining power.

This type of problem is well understood in many similar organisations that I’m familiar with, where there has been a focused effort by the governing body to create a culture of service to the membership / stakeholders.  This has been achieved by placing strict limits on the amount of time any one person can occupy a position of power. Generally there’s a ‘leadership chain’ of one or two ‘vice presidents’ and then the president.  People on this chain have one year terms in each position and move up the ladder progressively (elections are for the lowest ‘rung’ on the ladder).  Similarly, members of the governing body can serve a maximum of two terms of two years and a minimum of 25% of the ‘board’ positions are up for election each year.

This type of governance framework provides both continuity and renewal, and discourages people seeking power for themselves.  Anyone interested in seizing ‘power’ for 10 to 20 years will go elsewhere and find another organisation to participate in. This continual renewal process ensures there are always new ideas and new sets of eyes to ‘see’ any problems that are emerging, balanced by experience to maintain the longer term objective of the organisation. Ethical standards, competency and other matters remain important within a governance framework focused on facilitating the organisation’s objectives.

It will be interesting to see if the inevitable changes in FIFA will move in this direction and then if they use their funding power to drive similar changes through the regional and national organisations. If there’s no structural change, there will be no lasting change in the governance culture and consequently in the culture of the whole organisation.

The second focus is the CBA bank. Culture is also an issue in the way the CBA bank is treating the people damaged by the toxic culture it encourages in its wealth management division.  The basic rule for dealing with a failure (particularly of this magnitude) is ‘own-up then fix-up’. You need to acknowledge the error and take appropriate actions to rectify the mistake.

The causes of the problems were structural, and are discussed in The normalisation of deviant behaviours, but it took a Senate enquiry to drag a reluctant acknowledgement of the error.  To avoid sanctions, the CBA also agreed to set up a ‘high profile’ unit to compensate the victims of its wealth management advice.  After many months virtually no-one has been compensated and the bank’s approach would appear to be parsimonious at best.

The ‘fix-up’ part of dealing with a problem requires quick and generous restitution as far as is possible. This is relatively easy where then primary loss is financial but runs counter to the bank’s demonstrated culture of not really admitting error accompanied by short-term monetarism.

A quick and generous solution would be to frame a simple calculation and make an offer. The CBA knows how much money was ‘brought to the table’ by their victims, they can easily calculate what that would be worth now if the bank had advised the people to invest in bank term deposits and  they know the value of the money actually returned to the people. A couple of weeks with a decent spreadsheet and everyone could have received a reasonable offer.  There may be a need to add in some costs incurred in fighting for the victims rights and for other losses and damage but the whole problem could be largely resolved by now.

The cost of this type of option will be insignificant compared to the less obvious but real costs associated with the wages and costs associated with the bureaucratic monster the bank has created, the massive on-going damage to the bank’s reputation and ‘brand capital’ and the contingent liabilities for further legal actions and/or government action driven by the bank’s approach to this problem.

I’m not sure how the logic of the bank’s assessment processes are structured but a report in the press this week that some people had only been offered a fee refund highlights an approach focused on minimising payouts rather then solving the problem.  If advice was so bad a refund of the fees paid for the advice is warranted, the advice was bad and liability for the damage it caused would appear to sit with the bank??

How you change the culture in an institution as big as the CBA from a parsimonious focus on paying out money to maximise short-term profits is a challenge of the CBA Board, but if they fail, sooner or later the CBA will fail because its stakeholder community will decide to do business elsewhere.  Just because you are big does not mean you are invulnerable.

Conclusion.

The first three elements in the six functions of governance are there for a reason.  Obviously the objectives of the organisation are its reason for existing and have to come first. Then the governing body has to do the hard work of developing the right set of ethics and the right culture within the organisation’s (making sure its governance framework supports the desired culture) before anything else can really occur. As FIFA in particular demonstrates, failure in these critical aspects of an organisation tarnish everything else is touches.

It is impossible to achieve a ‘customer centric’, stakeholder aware organisation if the culture is focused on power or short-term profits!

## New Articles posted to the Web #35

We have been busy beavers updating the PM Knowledge Index on our website with White Papers and Articles.   Some of the more interesting uploaded during the last couple of weeks include:

And we continue to tweet a free PMI style of exam question every day for PMP, CAPM and PMI-SP candidates: See today’s question and then click through for the answer and the Q&As from last week. You are welcome to download and use the information under our Creative Commons licence