Project and Program Sponsorship

September 26, 2010

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

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

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

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

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Managing to Avoid Detailed Expectations

September 14, 2010

One of the keys to project and program success is managing stakeholder expectations. Unrealistic expectations are unlikely to be fulfilled and when the project or project manager fails to live up to the unrealistic expectations they are seen to fail.

One area project managers regularly do themselves and their projects a major disservice is in preparing time and cost estimates. It is simply impossible to accurately predict the future (if we could casinos would go bankrupt!). However, far too many project managers seem willing to create schedules that state implicitly that a task will complete at 3:30pm on a Tuesday afternoon in 4 months time or the total cost of their project will be $10,986, 547.55. These pseudo accurate estimates based on detailed calculations are no more accurate then estimates made in more general terms and covered with an appropriate range indicator.

$10,986, 547.55 is no more valid than $11million +10% -5%. Achieving a detailed estimate for a $10 million plus project to within -5% to +10% would indicate a very careful estimating process in a stable, well understood environment. What is different is the precisely inaccurate number calculated to the nearest cent will raise the expectations of a range of stakeholders as to degree of accuracy possible leading to ‘perceived failure’ when the stakeholder’s unrealistic expectations are not realised.

Similar problems arise if a project is scheduled in hours and the work extends for more than a few days. Certainly scheduling on an hour by hour basis for a high intensity project that has a total duration of one or two weeks (or less) is sensible and desirable. A typical example would be a maintenance shutdown at a major facility. The cost of every hours production lost can be many thousands of dollars.

However, taking the same approach to a project running over several months simply produces a mass of inaccurate data once you get beyond the first few days but the stakeholder’s expectations as to the degree of accuracy possible from scheduling will have been raised to unrealistic levels. Again, when the project fails to achieve this degree of control over the future implied by the excessively detailed schedule, it will be seen to have failed.

We have just posted two White Papers focused on a practical approach to estimating activity durations and costs, they can be downloaded from:
http://www.mosaicprojects.com.au/WhitePapers/WP1051_Cost_Estimating.pdf
http://www.mosaicprojects.com.au/WhitePapers/WP1052_Time_Estimating.pdf

Practical estimating is only one aspect of managing stakeholder expectations. Your stakeholders may already have unrealistic expectations of what is possible from previous projects that ‘failed’ (there was nothing wrong with the detailed estimating processes just all of the inept project managers…). Dealing with this issue requires effective management of your senior stakeholders by ‘managing upwards’. This is the topic of my next book due for publication next year.


Using a Risk Management approach for Assessing Claims

September 3, 2010

One of the more difficult management decisions is how hard to pursue a contract claim. The claim will inevitably have a deleterious impact on a key stakeholder relationship and any significant claim will have proportionally high costs associated with legal and other expenses. Balancing the inevitable costs against the possible gains is a difficult but necessary decision before moving forward. Usually, the potential yield of a claim is given as a subjective assessment based on experience.

Dr. John Lancaster of Hill International has recently published a paper that seeks to remove the subjectivity from the assessment of which claims are worth pursuing (see 1 below). Lancaster proposes using a risk assessment approach to determine the likely range of outcomes and which claims contribute the most to the likely settlement. He suggests using the following factors:

  • Entitlement confidence:
    • The strength of the contractual argument for entitlement; and
    • Contractually compliant notices.
  • Magnitude confidence:
    • The quality and quantity of supporting records;
    • The quality of the project schedules (and any necessary corrections and/or repairs), cost records, etc; and
    • The certainty with which the effect/s of each event is known.

Applying a percentage weighting to these factors and using Monte Carlo analysis the likely range of cost and time outcomes can be assessed and the key claims identified.

It is important that the right people complete this assessment: the entitlement confidence categories should be assessed by counsel and the magnitude confidence categories assessed by the domain experts with input from the project staff.

The results of this analysis will identify:

  • The likely outcomes under the prevailing entitlement and magnitude confidence ratings;
  • The probabilities of securing different outcomes; and
  • Identifying the claims that are the most important to the overall claim and which ones require more work.

Based on this assessment and after factoring in the costs and consequences of making the claim, pragmatic decisions can be made on:

  • whether or not to pursue a claim;
  • where to set negotiation limits (see 2 below); and
  • which of the claims, with more work on establishing entitlement and/or substantiation, could contribute the most to a robust claim.

In an ideal world effective stakeholder relationship management would remove the need for contractual claims. When they become necessary, Dr. Lancaster’s ideas will help remove much of the unnecessary ‘heat’ from the assessment process and provide a pragmatic baseline for managing any claim in a professional and business like way.

  1. Lancaster, John, “The use of risk analysis techniques to evaluate potential delay claim outcomes,” Project Control Professional: The Journal of the Association of Cost Engineers, February 2010. The full article is available on request from johnlancaster@hillintl.com.
  2. For more on dispute management and negotiating see: http://www.mosaicprojects.com.au/WhitePapers/WP1049_Dispute_Management.pdf