Construction CPM 2013

Tennessee Williams once said “America has only three cities: New York, San Francisco, and New Orleans. Everywhere else is Cleveland.”  Having now been to all four places I can understand the sentiment.

As I write this, the Construction CPM 2013 conference is in full swing and is proving as dynamic as its host city of New Orleans. A strong line-up of speakers focusing on the tools, techniques, art and science of critical path management is supported by an equally diverse and interesting social program.

Many of the interesting concepts and ideas we have encountered will undoubtedly be finding their way into our thinking and writing over the next few months, whilst the papers we have presented so far have been well received with one to go tomorrow. Our presentations are available from:

• Controls Communicate?
• Avoiding the ‘Tipping Point to Failure’
• Estimating Fallacies – excessive detail does not help

It’s not all hard work! The networking and social program are always a highlight of Construction CPM and when you overlay the excitement of the French Quarter of New Orleans and you start to really challenge the stamina. The final event last night was a ‘Bourbon on Bourbon Street’ tonight its jazz in ‘Fred’s Nightclub’, both finishing at midnight!

If you are involved in project controls start planning for 2014!  If the USA is too far to travel, we have a local Governance and Controls symposium coming up in Canberra in the 10th April.

ISO 26000, CSR and Stakeholders

Numerous studies have consistently shown that organisations that support overt corporate social responsibility (CSR) activities, either by allowing staff to participate in voluntary work or by donating to charities, or 100s of similar options for giving back to the wider community do better than organisations that do not. It is an established fact that organisations that embrace CSR have a better bottom line and more sustained growth, however, what has not been clear from the various studies is why!

Two options regularly canvassed are:

• Because the organisation is doing well for other reasons it has the capacity to donate some of the surplus it is generating to the wider community whereas organisations that are not doing so well need to conserve all of their resources. Factor in the effect of taxation and great PR is generated at a relatively low net cost.
• Because the organisation does ‘CSR’ it enhances its reputation and as a consequence becomes a more desirable place to work and therefore attracts better staff at lower costs and is also seen as a better organisation to ‘do business with’ and therefore attracts better long term partners and customers again at a lower cost than other forms of ‘public relations’ and advertising.

Both of these factors have a degree of truth about them and frankly, if an organisation does not seek to maximise any competitive advantage its management are failing in their duties. However, this post is going to suggest these are welcome collateral benefits and the reason CSR is associated with high performance organisations lays much deeper.

We suggest that observable CSR is a measurable symptom of ‘good governance’. The Chartered Institute of Internal Auditors define governance in the following terms:
Governance is about direction, structure, process and control, it also is about the behaviour of the people who own and represent the organisation and the relationship that the organisation has with society. Key elements of good corporate governance therefore include honesty and integrity, transparency and openness, responsibility and accountability.

Consequently, a well governed organisation will generally have a good reputation in the wider community; this is the result of the organisation’s stakeholders giving that organisation credibility and loyalty, trusting that the organisation makes decisions with the good of all stakeholders in mind. It can be summarised as the existence of a: a general attitude towards the organisation reflecting people’s opinions as to whether it is substantially ‘good’ or ‘bad’. And this attitude is connected to and impacts on the behaviour of stakeholders towards the organisation which affects the cost of doing business and ultimately the organisation’s financial performance.

Therefore, if one accepts the concept that the primary purpose of an organisation of any type is to create sustainable value for its stakeholders and that a favourable reputation is a key contributor to the organisation’s ability to create sustainable value. The importance of having a ‘favourable reputation’ becomes apparent, the reputation affects stakeholder perceptions which influence the way they interact with the business – and a favourable reputation reduces the cost of ‘doing business’.

However, whilst a well governed organisation needs, and should seek to nurture this favourable reputation, it is not possible to generate a reputation directly. The organisation’s reputation is created and exists solely within the minds of its stakeholders.

As the diagram below suggests, what is needed and how it is created work in opposite directions!

What the organisation needs is a ‘favourable reputation’ because this influences stakeholder perceptions which in turn improve the stakeholder’s interaction with the organisation, particularly as customers or suppliers which has a demonstrated benefit on the cost of doing business. But an organisation cannot arbitrarily decide what its reputation will be.

An organisation’s ‘real reputation’ is not a function of advertising, it is a function of the opinions held by thousands, if not millions of individual stakeholders fed by all of the diverse interactions, communications, social media comments and other exchanges stakeholders have with other stakeholders. Through this process of communication and reflection the perception of a reputation is developed and stored in each individual’s mind. No two perceptions are likely to be exactly the same, but a valuable ‘weight of opinion’ will emerge for any organisation over time. The relevant group of stakeholders important to the business will determine for themselves if the organisation is substantially ‘good’ or ‘bad’. And because the sheer number of stakeholder-to-stakeholder interactions once an opinion is generally ‘held’, it is very difficult to change.

The art of governance is firstly to determine the reputation the organisation is seeking to establish, and then to create the framework within which management decisions and actions will facilitate the organisation’s interaction with its wider stakeholder community, consistent with the organisations communicated objectives.

Authenticity is critical and ‘actions speak louder than words’ – it does not matter how elegant the company policy is regarding its intention to be the organisation of choice, for people to work at, sacking 500 people to protect profits tells everyone:

1. The organisation places short term profits ahead of people.
2. The organisations communications are not to be trusted.

The way a valuable reputation is created is through the various actions of the organisation and the way the organisation engages with its wider stakeholder community. Experiencing these interactions create perceptions in the minds of the affected stakeholders about the organisation. These perceptions are reinforced by stakeholder-to-stakeholder communication (consistency helps), and the aggregate ‘weight’ of these perceptions generates the reputation.

The role of CSR within this overall framework is probably less important that the surveys suggest. Most telecommunication companies spend significant amounts on CSR but also have highly complex contracts that frequently end up costing their users substantial sums. Most people if they feel ‘ripped off’ are going to weight their personal pain well ahead of any positives from an observed CSR contribution and tell their friends about their ‘bad’ perception.

However, as already demonstrated, actions really do speak louder than words – most of an organisation’s reputation will be based on the actual experiences of a wide range of stakeholders and what they tell other stakeholders about their experiences and interactions. Starting at Board level with governance policies that focus on all of the key stakeholder constituencies including suppliers, customers, employees and the wider community is a start. Then backing up the policy with effective employment, surveillance and assurance systems to ensure the organisation generally ‘does good’ and treats all of its stakeholders well and you are well on the way. Then from within this base, CSR will tend to emerge naturally and if managed properly becomes the ‘icing on the cake’.

In short, genuine and sustained CSR is a symptom of good governance and a caring organisation that is simply ‘good to do business with’.

Unfortunately, the current focus on CSR will undoubtedly tempt organisations to treat CSR as just another form of advertising expenditure and if enough money is invested it may have a short term effect on the organisation’s reputation – but if it’s not genuine it won’t last.

One resource to help organisations start on the road to a sustainable culture of CSR is ISO 26000: 2010 – Social responsibility.  The Standard helps clarify what social responsibility is, helps businesses and organisations translate principles into effective actions and shares best practices relating to social responsibility. This is achieved by providing guidance on how businesses and organisations can operate in a socially responsible way which is defined as acting in an ethical and transparent way that contributes to the health and welfare of society. Figure 1 provides an overview of ISO 26000.

© ISO: https://www.iso.org/obp/ui/#iso:std:iso:26000:ed-1:v1:en

 

Interestingly, my view that understanding who the organisation’s stakeholders really are and engaging with them effectively is the key to success, is also seen as crucial by the standard developers! For more on stakeholder mapping see: http://www.stakeholdermapping.com

Conclusion

This has grown into a rather long post! But the message is simple: Effective CSR is a welcome symptom of an organisation that understands, and cares about its stakeholders and this type of organisation tends to be more successful than those that don’t!

Don’t procrastinate about your goals for 2013!

The strategies for achieving goals were purported to have been defined in the “1953 Yale Study of Goals.”  But, as it turns out this study is little more than an often-quoted urban legend that, it appears, was never actually conducted.

However, what’s even stranger is a recent study by professor Dr. Gail Matthews of the Dominican University of California, backs up these ‘mythical’ strategies for achieving goals! The legend is based in fact!! (Read the full report)

So based on real scientific study if you want to fulfil your New Year Resolutions and achieve your goals for 2013 the verdict is in – write down your goals, ensure they are SMART (Specific, Measurable, Actionable, Realistic and Time-framed) and tell your friends or colleagues.

The research shows that that people who write down specific goals for their future are far more likely to be successful than those who have either unwritten goals or no specific goals at all; and that people who wrote down their goals supported by ‘action commitments’, shared this information with a friend, and sent weekly updates to that friend were on average 33% more successful in accomplishing their stated goals than those who merely formulated goals.

Unfortunately, the research did not identify a way to prevent us procrastinating about getting started and actually writing some formulated goals down …… but there are some useful ideas in our White Paper on ‘Personal Time Management’ that can help.

PMBOK #5 Boosts Stakeholder Management

The publication of the PMBOK® Guide 5th Edition is a major boost for stakeholder management. The introduction of Chapter 13, Project Stakeholder Management as a distinct knowledge area raises the importance of engaging stakeholders to the same level as all other PM ‘knowledge areas’. Ideally the new section would have been placed next to the closely aligned process of communication management but this is not to be – the PMBOK is expanded by adding new chapters to the end.

The four processes follow the familiar PMBOK pattern with a few differences. They are:

• 13.1 Identify Stakeholders – identifying everyone affected by the work or its outcomes.
• 13.2 Plan Stakeholder Management – deciding how you will engage with the stakeholders.
• 13.3 Manage Stakeholder Engagement – communicating with stakeholders and fostering appropriate stakeholder engagement
• 13.4 Control Stakeholder Engagement – monitoring the overall relationships and adjusting your strategies and plans as needed.

The 5 stages of our ‘Stakeholder Circle’ methodology are embedded within these processes; the key steps in the ‘Stakeholder Circle’ are:

1. Identify – the primary purpose of 13.1 with very similar objectives.
2. Prioritize – This is mentioned in 13.1 (Identification) without any real assistance on an effective approach to this important task. The PMBOK recognises most projects are going to be resource constrained and should focus its engagement activities on the important stakeholders but that’s all – options to calculate a meaningful prioritisation is missing. See more on prioritisation.
3. Visualize – This is also included in 13.1 (Identification) based on a simple 2 x 2 matrix. A number of options are listed including power/interest, power/influence, and the influence/impact grids. The Salience model developed by Mitchell, Agle, and Wood 1997 is also mentioned without attribution.In reality to properly understand your stakeholders you need to understand significantly more than two simple aspects of a relationship. The ‘Stakeholder Circle’ diagram was adapted from the Salience model to help teams really appreciate who matters and why. This will be the subject of another post in a couple of day’s time.
4. Engage – the primary purpose of 13.2 (Plan engagement) and 13.3 (Implementing the communication plan). Separating planning and implementation is a good idea. The planning process uses an engagement matrix similar to the tool built into the ‘Stakeholder Circle’ – However, whilst the PMBOK looks at the attitude of each stakeholder (both current and desired) it omits the key consideration of how receptive the stakeholder is likely to be to project communication. If the stakeholder does not want to communicate with you the challenge of changing his/her attitude is a whole lot harder and the missing priority level lets you know how important this is.
5. Monitor and Review – whilst this is the focus of 13.4, the assumption of review and adjustment is a statusing process. Our experience suggests the dynamic nature of a stakeholder community requires the whole cycle starting with the identification of new and changed stakeholders to be repeated at regular intervals of 3 or 6 months (or at major phase changes).

Conclusion.

As mentioned at the beginning, the introduction of a separate knowledge area for stakeholder management is a huge advance and should contribute to improving the successful delivery of projects – PMI are to be congratulated on taking this step!

However, unlike most other areas of the PMBOK, the processes outlined in this 5th Edition are likely to be less than adequate for major projects. As soon as there are more than 20 or 30 stakeholders to assess and manage, the tools described in this version will be shown to be inadequate and more sophisticated methodologies will be needed.

Note:
Stocks of the PMBOK® Guide 5th Edition are now in the shops:
Internationally: http://marketplace.pmi.org/Pages/Default.aspx
Australia: http://www.mosaicprojects.com.au/PMP-Pack-LP.html

For other posts on the new PMBOK 5th Edition see: https://stakeholdermanagement.wordpress.com/category/pmbok-5th-edition/

Prediction is very difficult!

“Prediction is very difficult, especially about the future” (Niels Bohr) but project managers, planners and estimators are continually expected to provide management with an ‘accurate prediction’ and suffer the consequences, occasionally even being fired, when their prediction proves to be incorrect.

What is even stranger, most project predictions are reasonably accurate but classed as ‘wrong’ by the ‘managers’ but the same managers are quite happy to believe a whole range of other ‘high priced’ predictions that are consistently far less accurate (perhaps we should change more for our services…).

There seems to be a clear divide in testable outcomes between predictions based on data and predictions based on ‘expertise’, ‘gut feel’ and instinct.

A few examples of ‘expert’ predictions that have gone wrong:

• Last January the Age Newspaper (our local) assembled its traditional panel of economic experts to forecast the next 12 months. 18 out of 20 predicted the Australian dollar exchange rate would remain below US$1. The actual exchange rate has been above US$1 for most of the last 6 months -10% correct, 90% wrong!
• The International Monetary Fund (IMF), the European commission, the Economist Intelligence Unit and the Organization for Economic Cooperation and Development all predicted the European economies would contract by $0.50 for every $1.00 reduction in government expenditure and therefore whilst painful, cutting deficit spending would be beneficial. The actual contraction has now been measured by the IMF at $1.50 contraction per dollar, and the reductions in deficit spending are creating more problems that they are solving, particularly in the Euro Zone.
• Most ‘experts’ predicted a very close race in the last USA Presidential election; the final result was 332 votes for Obama, 206 for Romney.

The surprising fact is that most ‘expert’ predictions are less accurate than a random selection – they are more wrong than pure chance! In his book ‘Expert Political Judgment: How good is it’ Philip Tetlock from Berkeley University tested 284 famous American ‘political pundits’ using verifiable tests (most of their public predictions were very ‘rubbery’). After 82,000 testable forecasts with 3 potential outcomes, he found the expert’s average was worse then if they had just selected a, b, or c in rotation.

The simple fact is most ‘experts’ vote with the crowd. The reward for ‘staying with the pack’ is you keep your job if you are wrong in good company – whereas if you are wrong on your own you carry all of the blame. There are several reasons for this; experts have reputations to protect (agreeing with your peers helps this), they operate within a collegiate group and know what the group believes is ‘common sense’, they are not harmed by their incorrect forecasts, and we are all subject to a range of bias that make us think we know more then we do (for more on bias see: http://www.mosaicprojects.com.au/WhitePapers/WP1069_Bias.pdf).

There are exceptions to this tendency; some forecasters got the USA election right and weather forecasters are usually accurate to a far greater degree than mythology suggests!!

During the 2012 election campaign, whilst the Romney camp was making headlines with ‘experts’ and supportive TV and radio stations predicting a very close contest, Drew Linzer posted a blog in June 2012 forecasting that the result would be 332/206 and never changed it and the New York Times ‘data geek’ Nate Silver also forecast the result correctly.

What differentiates weather forecasters, Linzer and Silver from the traditional ‘experts’ is the fact their predictions are driven by ‘data’, not expert opinion. Basing predictions on data requires good data and good, tested models. Elections are a regular occurrence and the data modelling of voter intentions has been tested over several cycles, forecasting weather is a daily event. For different reasons both sets of models have been the beneficiaries of massive investment to develop and refine their capabilities, the input data is reliable and measureable and the results testable. I suspect over the next year or two, the political pundit espousing their expert opinion on election results will go the same way as using seaweed or the colour of the sky to predict the weather, they will be seen as cute or archaic skills that are no longer relevant.

But how does this translate to predicting project or program outcomes?

• First cost and schedule predictions based on reliable data are more likely to be accurate than someone’s ‘gut feel’; even if that someone is the CEO! Organisations that want predictable project success need robust PMOs to accumulate data and help build reliable estimates based on realistic models.
• Second, whilst recognising the point above, it is also important to recognise projects are by definition unique and therefore the carefully modelled projections are always going to lack the rigorous testing that polling and weather forecasting models undergo. There is still a need for contingencies and range estimates.

Both of these capabilities/requirements are readily available to organisations today, all that’s needed is an investment in developing the capability. The challenge is convincing senior managers that their ‘expert opinion’ is likely to be far less accurate than the project schedule and cost models based on realistic data. However, another innate bias is assuming you know better then others, especially if you are senior to them.

Unfortunately, until senior managers wake up to the fact that organisations have to invest in the development of effective time and cost prediction systems and also accept these systems are better then their ‘expert opinion’ project managers, planners and estimators are going to continue to suffer for not achieving unrealistic expectations. Changing this paradigm will require PPPM practitioners to learn how to ‘advise upwards’ effectively, fortunately I’ve edited a book that can help develop this skill (see: Advising Upwards).