Monthly Archives: February 2016

Practical Ethics

EthicsA string of disasters over the last couple of years suggest many business and government leaders simply do not understand ‘practical ethics’.  Through naivety, undue optimism, or laziness, they have set up situations based on blind trust in the ethical standards of others resulting in deaths, injury and the loss of $billions.

Just a few examples:

  • The ‘Home insulation program’ of 2008/9 resulted in 4 deaths, numerous house fires and many well established businesses being destroyed. The naive assumption by the Government seemed to be that with $millions of government funding easily accessed, businesses would still act ethically, train staff and comply with occupational health and welfare standards. The failure by businesses to meet this expectation has resulted in numerous prosecutions after the damage was done.
  • The outsourcing of technical and further education training (TAFE) to the private sector. Private providers under the VET Fee-Help scheme are paid for students signed up to courses, not for students qualified from courses – the naive assumption by the Government seemed to be that with $millions of government funding easily accessed, businesses would still act ethically and only sign up students that could benefit from the courses and would deliver good training outcomes. $hundreds of millions of public funds have been wasted – most of which can never be recovered.
  • Downer EDI’s Board of Directors appear to have blindly trusted their management to run the disastrous $3 billion Waratah train project. Normal governance feedback seemed to have been ignored to the point where the Directors were unable to get information on the project when needed, blowing a $20 million loss into a $200 million loss.

In each of these cases the government and business leaders seemed to have either assumed everyone would act ethically or relied on Adam Smith’s ‘Invisible hand’ (a flawed theory much loved by the rabid right, particularly in the USA). Unfortunately ethics is not that simple!  Writing a code of ethics[i] is a relatively simple process; encouraging people to live up to the code is far more difficult. There are several factors needed:

  • First, the organisations leaders need to lead by example. The ethical standards of the organisation and its supply chain are unlikely to exceed the standards set by the leadership (see: Ethical Leadership).
  • Second, the expected standards need to be clearly and unambiguously articulated. Saying you require one standard of behaviour and then paying people to perform differently will inevitably lead to the organisation getting what it has paid for (see: The normalisation of deviant behaviours).
  • Third, the governance and management systems need ‘real-time’ feedback to both encourage the desired standards of behaviour and to detect any ‘slips’ very early in the process so corrective actions can be implemented before there is a major issue (see: Self Correcting Processes).

Unfortunately governments in particular are reasonably good at enforcing standards years after the breach took place and seem to assume that the ‘deterrent effect’ will suffice to maintain ethical standards – this assumption patently does no work!  I doubt the £2.25m fine imposed on UK consultancy Sweett Group[ii] for bribing a prominent United Arab Emirates (UAE) businessman in return for work will have much effect on other unethical business people contemplating paying a bribe – for a start, no one expects to get caught. The ‘pink batt’ prosecutions occurred years after the scheme was closed, prosecutions under the VET Fee-Help scheme are still to eventuate (and rip-offs are still continuing). The simple fact is the fear of a potential prosecution in a few years time compared to the opportunity to make $millions now has very little effect on unethical people.

Conversely, over policing ‘ethics’ and watching every move can be as destructive as ‘blind trust’. If people feel they are not trusted, there is no incentive for them to act ethically.  Micro management is a major de-motivator and will inevitably lead to suboptimal performance with people doing ‘just enough’ and seeing how much they can get away with[iii]. This approach stifles innovation and creativity.

Practical ethics requires pragmatic trust. You need to trust the people you are working with, governing or managing, but have agreed processes that provide feedback and monitoring, that demonstrates your trust is being honoured.

  • In my ‘Six functions of governance’ management control functions are expected to provide feedback to the governing body that allows it to hold its management accountable and ensure conformance by the organisation being governed. Had these functions been implemented effectively EDI-Downer would be in a much better position today.
  • Demand feedback – even if you do not want to hear bad news! The recent announcement by CSIRO that its climate division will be virtually eliminated may be a pragmatic response to government initiatives and cost cutting but serves no one in the long term. Governments and business rely on climate science to make billion-dollar decisions. Without it, they will be relying on guesswork. Shooting the messenger simply means everyone is ‘flying blind’.
  • Build feedback into management systems. In the various government debacles mentioned above (and others) simple changes in process could have reward desirable outcomes rather than rewarding unethical behaviour. The purpose of any TAFE course is to educate a person and demonstrate learning by success in an exam.  Why not pay most of the money on completion of the course? Then make sure audit processes are in place to validate the exam performance is genuine – these exist and are easily applied.

Pragmatic trust is a graduated process – as people demonstrate their trustworthiness and ethical standards less oversight is needed (but less does not mean no oversight); the challenge is to design systems that reward desirable behaviours and outcomes creating a win-win, people who demonstrate high ethical standards are rewarded.

This approach is the antithesis of the current government approach which seems to rely on blind trust, assumes everyone is ethical, and as a consequence directly benefits unethical behaviours (at least in the short term). Not only have the $millions paid out in VET Fees to unethical providers resulted in minimal return to the government; they have actively encouraged unethical standards and have damaged businesses and organisations that do offer quality courses. A lose-lose outcome in which the only winners are the unethical businesses that have ripped off the system – the Pink Batts Royal Commission found a similar effect on the insulation businesses.

Slippery-slopeEthics are by definition based on the standards of behaviour considered acceptable by a group[iv].  When a significant proportion of the groups members start to let standards slip, they will tend to drag the rest of the group with them down the slippery slope – it is very hard to stand out against the normally accepted behaviours of your group. And as with any slippery mountain slope, it is far easier to slide towards the bottom than to keep your footing and climb towards the top.

The role of ethical leaders is first to set the ethical standards, then live up to the standards themselves, and finally require their followers to conform to the standards using pragmatic trust and encouragement rather than after the event punishment.


 

[i] The PMI Code of Ethics and Professional Conduct is a good example: http://www.mosaicprojects.com.au/PDF/PMICodeofEthics.pdf

[ii] See: http://www.globalconstructionreview.com/news/sweett-group-must-pay-32m-bri7bery-a7bu-dh7abi/

[iii] For more on motivation see: http://www.mosaicprojects.com.au/WhitePapers/WP1048_Motivation.pdf

[iv] For more on ethics and leadership see: http://www.mosaicprojects.com.au/WhitePapers/WP1001_Ethics.pdf

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Australian Defence White Paper requires a major increase in project delivery capability.

DEF-WPThe Australian Defence White Paper 2016, released today, will require a major increase in project delivery capability across defence.   For the first time, an integrated approach to capital investment planning is being used which will provide the framework for a more coherent and efficient approach to managing the development of future Defence capability. However, whilst a single investment program will reduce the risk of incomplete or fragmented approaches to investment, there will be a corresponding need to seriously ramp up capabilities in program[1] and portfolio management.

Coupled with a more complex (but potentially beneficial) management environment, there is also a major increase in the volume of projects and programs with an expenditure of approximately $195 billion (in today’s terms) planned for the next decade. Some of the projects and programs in the pipeline include:

  • Increasing the submarine force from 6 to 12 regionally superior submarines with a high degree of interoperability with the United States.
  • Three Hobart Class Air Warfare Destroyers (under construction).
  • A new class of nine future frigates.
  • New replenishment vessels.
  • More capable offshore patrol vessels,
  • New manned and unmanned aircraft for border protection.
  • A new large-hulled multi-purpose patrol vessel, the Australian Defence Vessel Ocean Protector.
  • The F-35A Lightning II program.
  • Twelve E/A-18G Growler electronic warfare aircraft.
  • More air-to-air refuellers will be acquired to support future combat, surveillance and transport aircraft.
  • New personal equipment for soldiers.
  • A new generation of armoured combat reconnaissance and infantry fighting vehicles, as well as new combat engineering equipment.
  • A new long-range rocket system to further enhance fire power,
  • Armed medium-altitude unmanned aircraft to enhance surveillance and protection for the land force.
  • Extending the life of and acquiring new weapons and equipment for the amphibious ships.
  • New light helicopters will be acquired to support Special Forces operations.
  • Upgrades to ADF bases and logistics systems, including fuel and explosive ordnance facilities.
  • Upgrade training and testing facilities, health services and information and communications technology.
  • Air lift capability will be increased to comprise 8 heavy lift C-17A Globemasters with additional heavy lift aircraft to be considered in the longer term, 12 upgraded C-130J Hercules, 10 C-27J Spartans and 10 CH-47F Chinook helicopters. Sea lift capability will be strengthened by extending the

Add the White Paper’s commitment to Australian industry involvement in most of these projects and the volume of work that will require effective project governance, management and controls becomes apparent. To download the white papers see: http://www.defence.gov.au/WhitePaper/

Fortunately Australia already has an effective forum focused on improving the capability of government and industry to govern and control its projects and programs.  The Project Governance and Controls Symposium, hosted by the University of Mew South Wales Canberra (ADFA), is focused on developing this capability and providing a forum for exchanging learning and ideas.  The 2016 Symposium is scheduled for May 10th to 12th, see: http://www.pgcs.org.au/

The Australia government has laid out the plans, its up to the project management profession to realise the intent, effectively and efficiently[2].   Watch this space…….


 

[1] Where the term ‘program’ is used to mean a series of projects (of very different types) managed together to achieve benefits that would not be available if they were managed separately. See: www.mosaicprojects.com.au/WhitePapers/WP1022_Program_Typology.pdf

[2] Improving the project delivery capability of Australian government departments is the focus of the separate Shergold report, see: https://mosaicprojects.wordpress.com/2016/02/20/the-shergold-report-calls-for-better-governance-and-better-project-controls/

New Articles posted to the Web #43

BeaverWe 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

The Shergold Report calls for better governance and better project controls!

Shergold2The recently released report by Professor Peter Shergold, ‘Learning from Failure: Why large government policy initiatives have gone so badly wrong in the past and how the chances of success in the future can be improved’ (the Shergold Report), sets out a framework designed to improve the delivery of major Australian Government programs.  But the framework is not limited to government; the concepts can be usefully applied by any organisation seeking to initiate a major program of works.

The report focuses on making practical recommendations to enhance the capacity of the Australian Government to:

  1. Design and implement large public programmes and projects;
  2. Develop robust and effective governance and accountability arrangements for such programmes and projects;
  3. Understand the broader environment in which programmes and policies are designed and implemented;
  4. Identify, understand and manage risks; and
  5. Provide accurate, timely, clear and robust advice to ministers and within the APS.

Substitute ‘organisation’ for ‘Australian Government’ and ‘senior stakeholders and governors’ for ‘ministers and within the APS’ and the value of the document to the wider community becomes apparent.

The Shergold Report does not make specific recommendations to the government; rather it reaches a series of immutable conclusions based on the narrative in each section and is intended to spark public comment and discussion from a wide spectrum of people both within and outside of the Australian Public Service.

The Shergold Report contains 28 proposals for improvement; the key conclusions are reproduced below are reformatted as recommended good practices for any organisation planning to undertake a major program of works:

Ensuring Robust Advice: Good governance is founded on good policy, and good policy depends on good advice. To this end, executives and managers should be held accountable for the quality of advice they provide. Significant advice should be provided in writing and records maintained.

Decision Making: The importance of decision-making, and the circumstances under which it occurs, underscore the need to have well-functioning support systems in place.

Creating a Positive Risk Culture: Moving the organisation from reactive, defensive risk management; to proactive, performance-focused risk engagement. The major challenge is to embed the new approaches within a strong risk culture. This requires: understanding appetites for risk on individual programs and across the portfolio, appointing a Chief Risk Officer, at a senior executive level, proposals should be supported by an endorsed Risk Management Plan, and preparing a bi-annual whole-of-organisation Risk Assessment for the governing body, analysing the system-wide impact of operational, financial, strategic, legislative and procurement risks faced by the organisation.

Enhancing Program Management: Program and project management are too often seen as control activities; they are actually creative processes!  They require discipline and professional expertise to maintaining single point accountability while being open and flexible to the opportunities of networked governance structures. To achieve this requires:

  • Defined standards of proficiency for project and program managers, with active support through career development opportunities, continued education and participation in professional communities of practice such as the upcoming Project Governance and Controls Symposium.
  • For each project or programs[1], a clear understanding of who accepts end-to-end responsibility for managing implementation (typically the Sponsor[2]), wields delegated authority and where accountability resides.

Opening up to diversity: A diversity of perspectives in the workplace and the boardroom improves performance. Diversity increases critical analysis of information, results in better decision-making and challenges ‘groupthink’. Program advisory groups should be established that include representation drawn from outside the organisation in order to capture a broader diversity of perspectives and knowledge.

Embracing adaptive governance: Organisations that thrive are flexible. They seize opportunities, learn rapidly and recognise that partners will be needed to deliver long-term goals. When they enter uncharted territory they respond fast, start small, test new approaches, watch market responses, learn from doing, scale-up their activity or, if necessary, try again.

Most importantly, they are honest about failure. They recognise that mistakes happen, interrogate why they occurred and set in place remedial measures to ensure that they perform better next time. Failure and its lessons are an inevitable part of entrepreneurial life but are also central to maintaining organisational competitiveness. This means (where possible) new proposals should include a trial or demonstration stage, allowing new approaches to be developed fast and evaluated early. Large projects should incorporate staged decision-making[3].

Conclusions

Good governance is focused on creating good outcomes, not developing a straightjacket of impenetrable and restrictive procedures – the person or organisation that has never made a mistake has never made anything! The art of effectively using project and programs to create a new and desirable future is effective governance, backed by prudent risk management and effective, adaptive delivery and change management processes. The Shergold Report concludes that:

  1. Policy is only as good as the manner in which it is implemented
  2. Policy advice can only be frank and fearless if it is supported by written argument.
  3. Deliberations, oral and in writing, need to be protected.
  4. Deliberative documents need to be preserved, whether written on paper or delivered by digital means.
  5. It is up to ministers (the governing body), not officials (management), to make policy decisions.
  6. The effective management of risk is just as important in the public sector as in the private – perhaps more so.
  7. As the public service fully commits itself to measuring results by outcomes, program management needs to be accorded far greater professional status.
  8. Good governance increasingly depends on collaboration across sectors.
  9. The APS needs to be further opened up. Diversity and external inputs to the organisation.
  10. An adaptive government (organisation) can respond rapidly to changing circumstances without taking unnecessary (and unforeseen) risks.

The one area missing from the Shergold Report is recognition of the importance and difficulty of implementing organisational change (and the disciplines of change management and benefits realisation). The concepts are implicit in many aspects of the report but would have benefitted from direct discussion.

These limitations aside, the Shergold Report is a very deep and well considered document, well worth the effort of reading by both private and public sector mangers and governors. It highlights failures and the learning that can be taken from the experiences to improve future outcomes. To quote Confucius “By three methods we may learn wisdom: First, by reflection, which is noblest; Second, by imitation, which is easiest; and third by experience, which is the bitterest”. Learning from other’s experience may not be the ‘noblest’ option but is far preferable to repeating avoidable mistakes.

We will be commenting further on this report in future posts and I’m sure it will feature prominently in discussions at the upcoming Project Governance and Controls Symposium that is being held in Canberra in May.

Shergold1

The full report can be downloaded from: http://www.apsc.gov.au/publications-and-media/current-publications/learning-from-failure

From a completely different source, the Australian Infrastructure Plan Priorities and reforms for our nation’s future (Feb. 2016), recommendations under Chapter 9 – Governance calls for very similar processes to the Shergold Report.  These reports, and many previous, have consistently promulgated the same message.  We know what needs to be done, understanding why its not being done is the real challenge.


 

[1] To understand the difference between a project and a program see: http://www.mosaicprojects.com.au/WhitePapers/WP1002_Programs.pdf

[2] For more on the role of the Sponsor see: http://www.mosaicprojects.com.au/WhitePapers/WP1031_Project_Sponsorship.pdf

[3] For more on ‘gateway reviews see: http://www.mosaicprojects.com.au/WhitePapers/WP1092_Gateways-Scorecards.pdf

Project Management is a Profession

A recent judgement of the English Court of Appeal in the matter of The Project Management Institute, R (On the Application Of) v The Minister for the Cabinet Office & Ors [2016] EWCA Civ 21 has produced some interesting findings.

Royal-Courts-of-Justice15The appeal by PMI from a judgement in the UK High Court related to a decision by the UK Government to recommend to the Privy Council, the Queen grant a Royal Charter to the Association for Project Management (APM).  The PMI appeal has been unanimously rejected on all grounds.

In the UK, the granting of a Royal Charter is restricted to eminent professional bodies or charities which have a solid record of achievement and are financially sound. In the case of professional bodies they should represent a field of activity which is unique and not covered by other professional bodies.

The APM is the largest project management institute in the UK (over 20,000 members), PMI has around 7000 members in the UK.  The Privy Council had found that the APM substantially met the key criteria for a professional association: the institution concerned should comprise members of a unique profession, and should have as members most of the eligible field for membership, without significant overlap with other bodies. PMI disputed this finding and the processes used to reach this decision (importantly PMI were not arguing project management is not a profession, rather the APM did not meet the five administrative criteria to be awarded the Royal Charter).

The Court of Appeal has unanimously upheld the trial Judge’s key finding that: I am satisfied that the [government] committee’s decision was a proper application of the published policy taken as a whole. The committee was entitled to recommend the grant of a Charter to APM on the basis that each of the five main criteria was met either to a substantial degree or in full and that there was a compelling public interest in favour of such a grant.

The statement from APM on the publication of the award says:

The Court of Appeal has today [22nd January 2016] handed down its judgement with respect to an appeal brought by the Project Management Institute (PMI) against the Government’s recommendation to the Privy Council to grant the award of a Royal Charter to the Association for Project Management (APM).

The Appeal Court Judges have confirmed the earlier decision of the High Court to reject PMI’s appeal. The full judgement is available on the Court of Appeal website.

APM remains committed to achieving Chartered status for the benefit of both the profession as a whole and the wider community.

It has reconfirmed its view that it remains for the Privy Council to decide, in the light of its published guidance and the individual circumstances of the organisation, whether a Charter ought to be granted.

APM continues to look forward to the Privy Council determining the application in due course.

However, even before the granting of the Royal Charter, we now have confirmation by the UK Court of Appeal that project management, as represented by the APM in the UK, is a profession and as such, the APM is able to be granted a Royal Charter.

Unfortunately on the 28th January 2016, PMI sought leave to appeal to the unanimous decisions of a UK government committee (consisting of several senior ministers), the UK High Court and  three eminent Jurists sitting as the Court of Appeal to the UK  Supreme Court (formally the House of Lords). A decision on PMI’s request is awaited.

If as is expected, PMI’s appeal is rejected, over time this decision will have a significant effect on the way project managers behave.  Apart from trashing PMI’s reputation with the UK Government,  a lack of ethics and professionalism on the part of a ‘professional’ is actionable, and being formally recognised as a profession should influence our engagement with the profession’s stakeholders.  Watch this space………

Construction CPM -v- PGCS

We have just returned from a very enjoyable and successful trip to New Orleans for Construction CPM and now its time to focus on making our Project Governance and Controls Symposium (PGCS) in Canberra equally successful!

Construction CPM is probably the world leading event for project scheduling tools and advances in the field of major project scheduling. There were nearly 300 delegates, speakers and partners attending events over 7 days (the Construction CPM conference was 3 days in the middle).  The papers we presented were:

The emerging trends in New Orleans were firstly risk, new tools and many papers on the challenge of uncertainty and surprisingly ethics and stakeholders (more on these later).

Project Governance and Controls Symposium (PGCS) is designed to enhance the connection between governance and project controls in government department and corporations. It’s too soon to identify the trends that will emerge in May but we already have an impressive line up of Keynote Speakers. See more at: http://www.pgcs.org.au/

Both events have an emphasis on building knowledge through networking and social events.  However, the PGCS program, which includes a reception in the ADFA Officers Mess pales in comparison to Construction CPM.

Some of the things you will not see or experience in Canberra include:

Plated hot breakfasts starting at 6:30am with the first presentations at 8:00am (we run a more ‘civilised’ program starting around 9:00am……).

Our own Mardi Gras Parade……

NOL1NOL2

 

 

 

 

 

The Konstruction Krew consisting of 250+ project controls professionals following a jazz band (complete with police escort and waving umbrellas) in their own Mardi Gras Parade through the French Quarter to Bourbon Street.

Burbon-St

Last drinks and a locally rolled cigar at the Bourbon Heat from 9:00pm to 2:00am (if you have the staying power) When I bailed out at midnight, Bourbon Street was still going strong!!

Float

A totally different definition of ‘Float’ – several of the official Mardi Gras Parades – each organised by a different ‘Krew’ passed in front of our hotel in Canal Street.

CharmaineCharmaine Neville and her band playing inthe conference ‘Jazz Club’ from 9:00pm……..  PMOZ was renowned for its parties – Construction CPM is at least as good! In total there were 11520 ounces of alcohol consumed at the official events (plus cash purchases).

NOL3One final ‘only in New Orleans’ – ice cream daiquiris in the place they were invented……

Add  4 Keynote Speakers, 79 Breakout Sessions a mock trial, pre-arranged dinners with ‘5 new friends’ each evening and you have an intensive enjoyable learning experience.

The next Construction CPM is earlier then usual, December at the Swan Resort, Walt Disney World, Orlando Florida.

Our PGCS Symposium in Canberra will be a bit more subdued (after all there is only one ‘New Orleans’).  Where we will be as good, if not better, is in the quality of the speaking program.  PGCS speakers already confirmed include Lisa Wolf of Booze Hamilton Allen, Melinda Penna of Telstra, and Kim Terrell of Department of Human Services.  For regular updates on the progress of PGCS  see:  http://www.pgcs.org.au/

New Articles posted to the Web #42

BeaverWe 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