Persilience: A key to success!

April 24, 2012

Persilience is something that is essential to success of any endeavour you undertake, whether it is achieving project success, business success or virtually anything else.

Definition:

Persilience: an amalgam of resilience and persistence that recognises the importance of both characteristics.
Resilience is the ability to recover readily from adversity;
Persistence is about perseverance, resolve and determination.

The two elements are not always combined in equal measure; sometimes you just need to get on with it (this is persistence) but at other times you need the strength of flexibility.

Resilient people bend before excessively strong forces, absorb the energy and then recover, if necessary reframe or modify their approach and move on, their personal integrity intact.

The origins of persilience

The idea of persilience came from a meeting earlier this year with colleagues in Paris where we were discussing the topic of successful implementation of programs in organisations. It was -10 degrees in Paris at that time. Despite (or because of) the extreme cold we met for dinner at a restaurant in the heart of Paris.

We were discussing the central theme – ‘what makes projects work?’ What is the key to success? A Brazilian colleague told me a story about a PM guru of the 80s who said was that you only needed one characteristic to be a successful PM – you had to be ‘tough!’

By ‘tough’ the guru meant being able to maintain faith and support in the project in the face of adversity and carry it through despite all setbacks. The meaning of the word ‘tough’ has changed over the years so we had a discussion about what word would best fit the characteristic – we didn’t disagree with the characteristic but needed a better word to describe it in today’s terms.

We decided that what was needed was a mixture of resilience and persistence in building and maintaining the relationships that mattered for PM success. And thus with the help of some fine wine the new blended word persilience was born.

Used wisely, the concept of persilience recognises Abraham Ribicoff’s concept of ‘the integrity of compromise’ where this is necessary and in the best interests of everyone whilst also allowing for stubborn persistence when ethical standards or other core values are being challenged.

Ethical persilience won’t resolve every problem but it can offer a benchmark characteristic for us all to aspire to achieving.

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Making a TV Show

April 16, 2012

This weekend we went to see the taping of the last ever episode of ‘Good New Week’ (GNW) – a comedy program we’ve enjoyed for years. Unfortunately all did not go according to plan (a topic we have discussed in other posts).

There were two sessions of 2 hours each with an hour’s break; we were booked to attend the second session starting at 5:00pm. Technical problems in the first session meant the second session did not start until after 6:00pm and generated a host of problems with some good learnings……

First, once the problem became apparent, the queue for the 5:00 show were told of the delay and the time to come back – good communication and good decision making (we went for a drink).

Second, the star host of the show, Paul McDermott apologised and explained the cause of the problem before starting the second session – admitting a problem and apologising is a great starting point; see: http://mosaicprojects.wordpress.com/2011/10/01/mistakes/

Then the show had to be taped out of sequence because several of the panellists also had their own shows to give as part of the overall Melbourne International Comedy festival. A lot of the re-organising was done on the fly but again as far as possible the audience were kept informed.

With all of the disruptions, our 7:00 dinner was delayed to 9.00pm (but we kept in communication with our stakeholder’s in the restaurant).

Thinking back on the experience one lesson learned is to extend a quotation often attributed to Otto von Bismarck (the first Chancellor of Germany) to the making of TV shows:

“If you like laws and sausages, you should never watch either one being made*”. This definitely applies to taped TV shows and highlights the skill and luck needed for ‘live-to-air’ shows.

*Note: This quote probably was not by Bismark, there is a quote: “Je weniger die Leute darüber wissen, wie Würste und Gesetze gemacht werden, desto besser schlafen sie nachts”. (The less the people know about how sausages and laws are made, the better they sleep in the night) attributed to him but not referenced, an earlier version “Laws, like sausages, cease to inspire respect in proportion as we know how they are made” was said by American poet John Godfrey Saxe (1816-1877).


Managing risk

April 9, 2012

One of the most overlooked processes for effectively managing the day-to-day uncertainty that is the reality for every single project, everywhere, all of the time, is an effective performance surveillance process. This involves more than simply reporting progress on a weekly or monthly basis.

An effective surveillance system includes regular in-depth reviews by an independent team focused on supporting and helping the project team identify and resolve emerging problems. Our latest White Paper, Proactive Project Surveillance defines this valuable concept that is central to providing effective assurance to the organisation’s key stakeholders in management, the executive and the governance bodies that the project’s likely outcomes are optimised to the needs of the organisation.


Stakeholder Risk Tolerance

April 3, 2012

Managing the inherent risk associated with undertaking any project, anywhere, in any industry is a critical organisational capability. Within the organisations overall Project Delivery Capability (PDC) the maturity of its risk management approaches is central to the organisation’s ability to generate value (see more on PDC Maturity).

Only very immature or deluded organisations seek or expect to run ‘risk free’ projects. To quote Suzanne Finnamore: “Delusion detests focus and romance provides the veil.” Any sensible analysis of any business activity will indicate levels of risk; effective organisations understand and manage those risks better then ineffective organisation.

The skills that a mature organisation brings to the art of ‘risk management’ is to focus effort on managing risks that can be managed, providing adequate contingencies for those risks that cannot be controlled and deciding how much residual risk is sensible. The balance that has to be struck is between the cost and time needed to reduce the risk exposure further (the pay-back diminishes rapidly), the impact of the risk if it occurs and the profit to be made or value created as a result of the total expenditure on a project.

The sums are superficially simple; adding another $100,000 to the cost of a project to reduce its risk exposure by $10,000 reduces the value of the project by $90,000. In competitive bids, increase your bid price too much and the value drops to $Zero because the organisation fails to win the work! However, the situation is more complex; the nature of the risk may require the expenditure regardless of the potential saving (particularly in areas of safety and quality) and whilst expenditures are reasonably quantifiable, the actual cost of a risk event and the probability of it occurring are variable and cannot be precisely defined for a unique project. Our paper The Meaning of Risk in an Uncertain World discusses these issues in more depth.

To develop a mature approach to risk management, each layer of management has a role to play:

  • The organisation’s governing body (typically a Board of Directors) is responsible for developing an appropriate risk taking policy and defining the organisations ‘risk appetite’.
     
  • The Executive are responsible for creating the culture and framework that approached the management of risk within the parameters set by the Board in a capable and effective way.
     
  • Senior management are responsible for implementing the risk management system.

The mark of a mature organisation is the recognition at all levels of management that having implemented these systems, the organisation still has to expect failure! Every single project has an associated risk and properly managed, these risks are at an acceptable level for the organisation. But if there is a probability for success, there has to be a corresponding probability of failure!

Assuming the organisation is very conservative and requires budgets to be set with appropriate contingencies to offer a 90% certainty of being achieved, and this setting is applied to all projects consistently, the direct consequence is an expectation that 1 in 10 projects will overrun cost. Certainly 9 out of 10 projects will equal or underrun cost but there is always the remaining 10%. Mature organisations expect the profits and un-spent contingencies on the ‘9 underruns’ to more then offset the ‘1 overrun’. However, these ‘expected failures’ tend to be totally ignored by immature executives who want to pretend there is ‘no risk’ and then blame the PM for the failure.

There are two aspects of dealing with the ‘expected failures’ implicit in any realistic risk assessment. The first is setting the boundaries of accepted risk at an appropriate level of the organisation. Aggressive ‘risk seeking’ organisations will set a lower threshold for acceptability and experience more failures that conservative organisations. But the conservative organisations will achieve far less.

Source: Full Monte Risk Analysis

Looking at the cost aspect of risk for the project above, the most likely cost for this project is $17,500 but this is optimistic with a less then 50% chance of being achieved. The range of sensible options are to set the budget at:

  • The Mean (50% probability of being achieved) is $17,770.
     
  • Add one standard deviation to the Mean increases the probability of achieving the project to 84%, but the budget is now $18,520.
     
  • Add two standard deviations to the Mean and the probability of achieving the budget increases to 97% but the budget is now up to $19,270.

From this point, the pay-back diminishes rapidly, to move from 97% to 99.99% (six sigma), an additional $3,000 would be required in contingencies making a total contingency of $4,770 to effectively guaranteed there will be no cost overruns. Because of this very high cost for a very limited change in the probability of achieving the objective most projects focus on either the 80% or the 90% probabilities.

However, even within these relatively sensible ranges, making a sensible allowance for risk has consequences. Assuming all projects have a similar cost distribution and the organisations total budget for all projects is $10 million the consequences are:

  • To achieve a 50%/50% probability of projects achieving budget, approximately 1.6% of the budget will need to be allocated to contingencies: $160,000
     
  • To achieve an 84% probability of projects meeting the allocated budget, approximately 5.8% of the budget will need to be allocated to contingencies: $580,000
     
  • To achieve a 97% probability of projects meeting the allocated budget, approximately 10.1% of the budget will need to be allocated to contingencies: $1,010,000

Whilst the mathematics used above are highly simplified, the consequences of risk decisions are demonstrated sufficiently for the purpose of this post (for more on probability see: WP1037 – Probability). To be 97% sure there will be no cost overruns, more than 10% of the available budget to undertake projects will be tied up in contingencies that may or may not be needed, the consequence is less than 90% of the possible project work will be undertaken by the organisation in a year. The projects ‘not done’ are opportunities foregone to be ‘safe’.

In a competitive bidding market, adding 10% to your estimate to be 90% sure there will be no cost overruns is likely to have a more dramatic effect and price the organisation out of the market resulting in no work. In either situation a careful balance has to be struck between accepted risk and work accomplished, this is a governance decision that needs input from the executive and a decision by the Board.

The governance challenge is getting the balance ‘right’:

  • The higher the safety margin the more likely most projects will underrun and the greater the probability some of the contingent reserves will not be used and therefore opportunities to use the funds elsewhere are foregone.
     
  • However, reducing the reserves increases the probability that more projects will overrun (ie, ‘fail’) and this increases the probability that in aggregate the whole project budget will be exceeded.

The challenge for the rest of management is making sure the data being used is as reliable as possible.

The second key feature of mature organisations is the existence of efficient scanning systems to see problems emerging backed up with effective support systems to proactively help the project team achieve the best outcome. The key words here are ‘proactive’ and ‘help’. The future is not set in concrete and timely interventions to help overcome emerging problems can pay dividends. This requires a culture of openness and supportiveness within the organisation so that the root cause of the emerging issue can be quickly defined and appropriate support provided, promptly and effectively. This approach is the antithesis of the approach adopted by immature organisations where the ‘blame game’ is played out and the project team ‘blamed’ for every project failure.

In summary, the organisation’s directors and executive managers need to determine the appropriate risk tolerance levels for their organisation and then set up systems that have the capability of keeping most projects within these accepted boundaries. Understanding and managing risk is a key element of PDC. But having done all of this, mature risk organisations know there are still Black Swans lurking in the environment and remain vigilant and responsive to unexpected and unforeseen events.