Are Sponsors over worked and under effective?

December 16, 2014

Sleepy-Sponsor1The Institute of Project Management (Ireland)  has published a  survey is based on self-reported information from their course based on nine major position descriptions/levels in reporting the data comparing the expected number of hours to be worked based on their terms of employment and the actual number of hours typically worked. The averaged data from senior management positions is worrying:

  • Director of PMO; expected: 39.0 Hrs, actual: 60.0 Hrs
  • Portfolio Manager; expected: 37.0 Hrs, actual: 50.0 Hrs
  • Project Manager (Senior); expected: 37.9 Hrs, actual: 50.3 Hrs.

Combine these findings with data from PMI on the hours worked by Sponsors (download the PMI report on ‘Executive Sponsor Engagement’) with many reporting working weeks of 50 to 60 hours on their ‘day job’ before taking on the additional responsibilities of sponsoring a project or a program; and, that effective sponsors report that typically they are working on three projects at a time, spending an average of 13 hours per week on each, the problem of over extension of key executives becomes obvious.

Combine these findings with the demonstrated correlation between effective sponsorship and achieving project success, the over extension of senior managers has serious consequences:

  • Sponsors have inadequate time to understand the project’s requirements and support the project manager leading to an increased probability of failure;
  • Tired managers make poor decisions, and tiredness affects ethical standards (see: Tired workers lose their ethics);
  • There is frequently not enough time to train the sponsor in his/her role further reducing their effectiveness; and
  • These pressures often lead to a lack of continuity in the sponsorship role, which is another identified source of project failure.

The evidence is clear, organisations that fail to effectively sponsor their projects and programs are making an overt commitment to wasting the organisation’s time, money and resources – there is an 80% greater probability of failure and no amount of effort at the ‘project management’ level can overcome executive management failures.

Sleepy-Sponsor2One simple way to stop the waste is for an organisation to defer any project where it is unable to find a committed, trained sponsor, with adequate time, energy and skills to properly fulfil their role. No sponsor – no project! (See more on the role of a sponsor)  This may sound extreme, but if the executive management team do not see the project as being sufficiently important to the organisation they manage, to reorganise the disposition of executive resources to properly support the work, then the project is probably not that important anyway. The organisation will be better off not spending the money and wasting its resources.

The governance challenge is creating a management culture that on one hand, actively encourages the deferment of projects that are inadequately supported (eg, don’t have a sponsor); and on the other actively encourages the development of the organisation’s capability to excel at the ‘the management of projects’ (see more on the strategic management of projects).

Sleepy-Sponsor3Creating this culture is a critical governance issue (see more on the governance of project management).  If an organisation cannot implement projects and programs efficiently, it cannot adapt and change to meet the challenges of a rapidly changing world which will inevitably lead to the organisation becoming obsolete. However, achieving the necessary changes won’t happen if the executive team are already overextended – the situation highlighted in both of the reports referenced in this post! Building the organisational capability to efficiently its projects and programs is itself a major change initiative that needs resourcing and sponsoring at the highest levels.

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The Functions of Governance

November 15, 2014

We have published 3 papers recently that clarify and differentiate the functions of management and the functions of governance.

The widely accepted ‘functions of management’ developed by Henri Fayol and published in his 1916 book Administration Industrielle et Generale, are summarised in: WP1094 The Functions of Management. Fayol’s ‘functions of management are:

  • M1 – To forecast and plan,
  • M2 – To organise
  • M3 – To command or direct (lead)
  • M4 – To coordinate
  • M5 – To control (French: contrôller: in the sense that a manager must receive feedback about a process in order to make necessary adjustments and must analyse the deviations.).

These functions are to be contrasted with my Six Functions of Governance:

  • G1 – Determining the objectives of the organisation
  • G2 – Determining the ethics of the organisation
  • G3 – Creating the culture of the organisation
  • G4 – Designing and implementing the governance framework for the organisation
  • G5 – Ensuring accountability by management
  • G6 – Ensuring compliance by the organisation

The mapping of the relationship between the functions of management and the functions of governance are set out below:

Mapping of the functions

Management functions are assumed to be hierarchal with the governance inputs cascading down to lower level functions.

Management functions are assumed to be hierarchal with the governance inputs cascading down to lower level functions.

These functions of governance were initially proposed in my ‘advisory article’: The Six Functions of Governance. Published in PM World Journal Vol. III, Issue XI – November 2014; download from here.

A more focused discussion paper has been published today in WP1096 The Functions of Governance.

Conclusion

Governance is the action of governing an organisation by using and regulating influence to direct and control the actions and affairs of management and others. It is the exclusive responsibility of the ‘governing body’, the person, or group accountable for the performance and conformance of the organisation (in a commercial organisation, the Board of Directors).

But in many situations, particularly associated with the governance of project and programs, the governing of organisations is far from effective. The amount of time and effort devoted by the ‘governing body’ to compliance and accountability, and the amount of resources wasted by ineffective and ‘competing’ management groups, can be significantly reduced if the organisation’s objectives, ethics and culture are sound.

Six core functions of governance are defined to bridge the gap between the ‘objectives of governance’ defined by Cadbury and others and the practices of governance defined by organisations such as the AICD. Hopefully discussion around the core functions of governance sparked by these papers will encourage improved governance performance.


Designing effective KPIs

August 5, 2014

KPI1In a couple of posts I highlighted the damage that poorly considered KPIs and incentive payments can cause either to the organisation or its customers:

This post fills the missing link and discusses the practical challenges of creating effective KPIs.

Key Performance Indicators (KPIs) exist to influence decisions and actions; effective KPIs motivate people towards taking valuable, and useful, actions and decisions.  Each KPI is a measure of how well a fundamental part of the project (or organisation) is progressing towards achieving its goals. The elements of a KPI are:

  • Key = something that is important, essential, fundamental.
  • Performance = the execution or accomplishment of work
  • Indicator = a measure, and record of variations

The specific purpose for each KPI is to communicate a relevant summary of the current situation to a particular person, or group; giving an indication of how effectively a particular element of the project (or work) is achieving its objectives. Because the KPI is an ‘indicator’ it does not have to be all encompassing, or provide all of the information about the activity. The purpose of a KPI is to highlight if and when more investigation is needed; they do not replace everyday ‘project controls data’ and other management information.

The challenge with KPIs is to set measures that provide indicators of potential problems in sufficient time to allow investigating and action.  The purpose of most projects is to create value through the realisation of benefits; unfortunately this ‘real measure’ only happens after the project is finished. So whilst tracking benefits realised is important, the information lags behind the actions that affect the outcome. Other leading indicators are needed that focus on the probability of generating value during the course of the work (which is more complex than simply measuring time and cost performance).

kpi3

 

The way to design effective KPIs involves six simple steps:

  1. Understand your audience and tailor specific KPIs for different levels and groups within the project and the project’s stakeholder community. Detail should decrease as you move up that structure, what’s useful to a team leader is information overload for a sponsor.
  2. Be clear and concise. Each KPI should be designed to deliver a message that will instigate one of two decisions; either ‘do nothing’ or ‘investigate’! The KPI’s job is to tell you one of these three things (any more information and it is not an ‘indecator’):
    1. Things are looking bad – investigate and fix
    2. Things are looking good – investigate and learn
    3. Things are OK – do nothing.
  3. Make the KPI understandable. The KPI is an indicator of how well specific work is being done, or accomplished; being clear about precisely what work and what goals is critical. This means the KPI has to:
    1. Be well written;
    2. Contain one clear measure;
    3. Set realistic targets;
    4. Be time framed;
    5. Define how the data will be tracked.
  4. Balance the KPIs across the performance window:
    1. Input KPIs – measure the quantity and sometimes quality of inputs to the project.
    2. Process KPIs – measure the quantity and sometimes quality of the work required to produce certain expected outputs.
    3. Output KPIs – measure the quantity and sometimes quality of the goods or services created.
    4. Value KPIs – measure the quantity and sometimes quality of the results achieved through the delivery of the goods and services eg, benefits realised.
  5. Use both types of KPI:
    1. Target KPIs focus on achieving a specific measure (pass / fail), usually within a time frame, eg, units delivered per week.
    2. Directional KPIs measure tends. With many KPIs the precise number is less important than the trend. For example, “Number of days lost to staff sickness” [per month]. Here the exact number of days is not that useful as we can’t control this, however if the trend is rising we can investigate and take action accordingly.
  6. Test and fine tune the KPIs, make sure you are getting the results you want. As both of the referenced posts have demonstrated, it can lead to disaster if you simply design, then implement, a KPI as a way to allocate bonuses without fully understanding if and how it can be ‘gamed’ or how it will affect morale, or any other unforeseen outcomes. Therefore:
    1. Allow some lead time to check that everyone understands the KPIs, if the outcomes being measured are reasonable and the data is easy to collects and accurate.
    2. Trial the KPI to make sure it is driving the behaviours you desire.

Finally, the characteristics of good KPIs are:

  • Simplicity. The metric name should be less than 5 words and the calculation is easily described in under 10 words.
  • Comparability. The measure is comparable to other time periods, sites, or segments.
  • Incremental. A rate or ratio is better than an absolute or cumulative value.

Some good KPIs include:

  • The accident (and ‘near miss’) rate on engineering and other ‘hard hat’ projects, a low rate indicates a safe environment which means a clean, well managed and well planned workplace.
  • Performance measures such as the number of activities completed within 5% of the estimated time (the workers cannot control the start but can control the flow of work once started).
  • The number of open issues (and the trend), or the number of issues that remain open after a ‘reasonable’ period (say 2 weeks).
  • Quality measures.

A final thing is to remember setting two or three effective KPIs and using them effectively across all projects is better than a scattergun approach. You know you have too many KPIs when you hear people saying things such as the “top KPIs” or “most important KPIs”.  Keep them simple, consistent and rigorous for the maximum benefit.


The strategic management of projects

June 20, 2014

WP1074_PPP_ArchitectureOne of the clearest messages emerging from a range of sources is that ‘project management’ as defined by the PMBOK® Guide and other similar documents is simply not enough!  As Professor Peter Morris has been advocating for more then a decade, organisations need to be able to effectively manage projects.

The concept of strategically managing projects describes the organisation’s ability to select, nurture and deliver the right projects and programs effectively. This includes an emphasis on the ‘front end’ of the overall process to ensure the right projects and programs are selected and initiated for the right strategic reasons and the ‘back end’ to make sure the outputs from a project are used effectively by the organisation to realise the intended benefits.  Traditional ‘project (or program) management’ deals with the messy bit in the middle – delivering the required scope efficiently.

Project management skills are well defined as are some aspects of the strategic management of projects such as portfolio management and benefits management. What has still to emerge in the executive management and governance layer of an organisation’s hierarchy is an understanding of the integrated nature of the strategic management of projects. At the moment in many organisations the executives and ‘governors’ who allow their organisations to create failure after failure seem to be able to emerge unscathed by blaming the failures on lower level managers within the organisations they have created.  Some of the reasons projects are ‘set up to fail’ are discussed in this post by Patrick Weaver.

From my perspective, this is a systemic failure of governance and the governing bodies should be held accountable for the destruction of stakeholder value associated with systemic project and program failures. The governing body should not be directly accountable for any specific project failure, rather for failing to develop their organisation in a way that enables the effective development of a realistic and achievable strategy, and then strategically managing the right projects and programs needed to implement the strategy. An overall framework for this type of strategic management of projects is outlined in our White Paper.

Implementing the organisational change needed to create the broad range of capabilities needed to implement the strategic management of projects requires sustained senior executive support and a group of determined, enthusiastic and resilient practitioners to develop the organisations ‘project delivery capabilities’.  The biggest challenge is very few practitioners can explain what they are recommending in a language that is meaningful to executives or really understand the type of information executives need to make the best decisions.

Unfortunately complex detailed reports with dozens of RAG traffic lights and a focus on ‘time and budget’ won’t do the job. A different reporting paradigm is needed that looks at strategic alignment and the delivery of benefits to the organisation and its stakeholders.  Some ideas on the best ways to effectively communicate with executives are discussed in my book Advising Upwards.

It is definitely time to move the strategic management of projects to the next level and that is firmly into the ‘C-Suites’ and board rooms of organisations. Once this is accomplished, professional project managers will be better positioned to deliver their part of the value chain effectively.


Getting value from an investment led policy

May 27, 2014

EU_FlagIf the Abbott/Hockey government is serious about an investment led recovery, they should take a leaf out of the EU’s book!  The European Union has approved regulations that increase the importance of applied project management skills as criteria for successful recipients of EU cohesion and structural funds. The new regulation describes the need for “building the capacity of local actors to develop and implement operations including fostering their project management capabilities.

The regulations see projects, program and portfolio management skills as part of the solution to the challenge of authorities getting projects completed successfully.

The new rules, will govern the next round of EU cohesion policy investment for 2014–2020. The purpose of the cohesion policy is to reduce disparities among the levels of development of the EU’s various regions by promoting economic growth, job creation and competitiveness and will make available up to €366.8 billion to invest in Europe’s regions, cities and real economy (the part that produces goods and services).

The intent of the EU policy is very similar to the 15% asset recycling bonus included in the Australian budget, designed to encourage Sates to sell assets and reinvest the money, plus 15% from the Federal government in new projects.  The question is will the Abbott/Hockey government also include a requirement for a commitment to fostering effective project management in the scheme?  We think it would be a great idea to adopt!


Understanding Governance

April 29, 2014

My last post looked at developing a grounded definition for the governance of PPP based on established definitions for corporate governance (see: Defining Governance – What the Words Mean) .  This post looks at how the definition can be put into practice to govern an organisation doing projects and programs.

An organisation is governed by its ‘governing body’ which, depending on the nature of the organisation, may be an individual, a small group, a committee or a formally constituted board of directors.  Whilst this statement may seem obvious, it is vitally important! The governing bodies job is to represent the interests of the organisation’s owners and to appoint, direct and oversight the organisation’s management (see more on organisational governance).

Within the organisation, the workers are appointed, directed and overseen by management, management is appointed, directed and overseen by the executive and the executive is appointed, directed and overseen by the governing body. However, whilst the governing body has responsibilities and obligations to both the organisation’s owners and other external stakeholders, within the organisation, the governing body is self-governing and very often self-appointing (in practical effect if not always in theory). And unlike management which is hierarchal, within most Boards the legal assumption, and general practice, is that all of the members are equal .

Governance Structure

 

The key responsibilities of the governing body are:

  • Framing the values and ethics of the organisation
  • Appointing the CEO and other key executives
  • Developing and maintaining the organisation’s strategy in collaboration with the executive
  • Ensuring an appropriate management system is developed by the executive (see more on governance and management systems)
  • Surveillance of the performance of the organisation
  • Stewardship of the organisations resources and assets
  • Taking appropriate actions to support the needs of stakeholders and sustainability (CSR).

The ‘governing body’ cannot achieve these responsibilities alone, management support is essential. However whilst the governing body can and should delegate aspects of the organisation’s governance processes to management and should hold management accountable for their performance, the ‘governing body’ is ultimately responsible for the actions of the organisation it is governing, including the actions and failures of management.

 

A Governance Framework

The Australian Institute of Company Directors (AICD) has developed a comprehensive Corporate Governance Framework to help directors understand their responsibilities and develop the skills they need to serve effectively on a ‘governing body’.  The framework sums up the practices (skills, attributes and expertise) that comprise good director practice as demonstrated by responsible directors.

It is designed as a wheel that has four quadrants depicting the four key areas of focus and engagement applying to every individual director: individual, board, organisational and stakeholder. Each quadrant is divided into a number of slices representing director practices essential to the quadrant’s focus (the different sizes of the slices do not represent the relative importance of the topic).

AICD GovFramework

Together with the AICD’s Guide for Directors and Boards: delivering good corporate governance, which articulates a set of values and principles that underpin the behaviours and practices of sound directorship, the framework provides a solid basis for developing the skills needed to ‘govern’ an organisation.

 

Governing Projects, Programs and Portfolios (PPP)

Whilst the inclusion of stakeholders as one of the four focuses is something I strongly applaud, the governance of PPP is focused in the ‘green quadrant’ and really only connects directly into a couple of the sub-sectors, primarily, implementing the organisations strategy (3.3.1). Therefore, a different frame is needed to understand the governance of PPP in the overall context of governing an organisation.  This reframing consolidates many of the personal responsibilities highlighted in the AICD framework whilst retaining the core tenet that governance is a holistic process and a significant failure within the PPP domain can have ramifications across the entire organisation. The ‘petal diagram’ below is our attempt to reframe the concepts of governance is it is affected by, and affects the PPP domain.

 

The Governance ‘Petal Diagram’

The ‘petals’ seeks to aggregate the various functions of governing the organisation into the five main themes, whilst other aspects of governance such as the performance of the ‘governing body’ and of individual directors have been largely omitted for clarity. The importance of these ‘other’ functions from the AICD perspective of developing the competence of directors is crucially important; the ‘petal diagram’ assumes competent directors and an effectively functioning board and focuses on the board’s role in governing the organization.

The domain of PPP is focused on implementing the changes needed to fulfil the organisation’s strategy and therefore, the processes of PPP are grouped in the ‘Governing Change petal’.  The other ‘petals’ are aspects of governance and management that affect, or are affected by the change processes.

Governance Petal Diagram

This petal diagram is a synthesis of several sources focused on various aspects of governance that are associated with projects, programs and portfolios. The primary source is the AICD ‘Company Directors Corporate Governance Framework™’. discussed above.

Secondary sources are a series of Standards that focus on the governance of projects and ICT, including:

  • Directing change: A guide to governance of project management (APM, 2011) (download from here);
  • AS 8015-2005 corporate governance of information and communication technology (AS8015, 2005); and
  • AS/NZS 8016: 2010 corporate governance of projects involving information technology investments (AS8016, 2010).

Within the ‘petal diagram’ some of the specific references are:

Values — Yellow section

Vision

•   GoPM: Assure the continued development of the organization
•   AICD Value: Leadership

Values & ethics

•   AICD ‘Ethics’ are a key sub-set of values

Corporate social responsibility

•   AICD 4.4 Society and Community

Governing of the Board

•   AICD Segments 1 and 2

 

Principle functions of governance — ‘the petals’

Governing relationships

•   AICD Quadrant 4

Governing change

•   AICD 3.3.1 Strategy
•   GoPM (full document)
•   AS8016 (full document)

Governing the organizations’ people

•   AICD 3.2.1 Executive Team
•   AICD 3.1.3 Culture
•   AICD 3.1.2 Policies and Assurance

Financial governance

•   AICD 3.1.3 Corporate outcomes—financial

Governing viability and sustainability

•   AS8016 1.4.3 (e)
•   Cadbury and others

From within this overall governance framework, the more specific aspects of governing PPP can be established (see more on governing PPP).

 

The two key takeaways from this post should be:

  1. Governance is a holistic process, and the ‘governing body’ has exclusive accountability and responsibility for the effectiveness of the organisation’s governance.
  2. Governance and management are quite different functions.

For more posts on governance see: http://mosaicprojects.wordpress.com/category/governance/

 


What price should you pay for perfection?

March 8, 2014

What price should you pay for perfection or alternatively how do you mange genius?

3D Scan of the building by the Scottish Ten Project

3D Scan of the building by the Scottish Ten Project

The Sydney Opera House is now over 40 years old, is the youngest cultural site to ever have been included in the World Heritage List, is the busiest performing arts centre in the world, supports more then 12,000 jobs and contributes more then $1 billion to the Australian economy each year. The fact is cost nearly 15 times the original under estimate with a final bill of $102 million pales into significance compared to the benefits it generates.

Over the years, we have written about the project and its value on numerous occasions some of the key discussions are:

What I want to focus attention on this time is the genius of Jørn Utzon and the inability of the NSW Government bureaucrats and politicians of the time to understand and appreciate the value of the work he did 50 years ago.

Utzon focused on developing partnerships with ‘best of kind’ manufacturers to prototype and test components then incorporating the best possible design into the fabric of the building. The process appeared relatively expensive in the short term (especially to bureaucrats used to contracting work to the lowest cost tenderer), but 50 years later the value of careful design and high quality craftsmanship is becoming more and more apparent.

Much of the structure was carefully designed precast concrete units, they were used extensively in the shell roofs, podium walls, sunhoods and external board walks. 50 years later the near perfect condition of the concrete despite its continuous exposure to a very hostile saline environment shows the genius of a person focused on creating a lasting landmark rather then seeking the cheapest short-term solution.

Similar longevity can be seen in the tiles that clad the shell roof, the glazed walls and most of the other work designed by Utzon (for more on this see the recently rediscovered, iconic 1968 film Autopsy On a Dream).

Contrast this clarity of vision leading to a high quality, long lasting, low overall cost outcome to the high costs of maintaining and/or replacing the elements of the building designed and installed by others after Utzon was forced to resign. The internal concert and opera halls are planned to be rebuilt at a mooted cost of between $700 million and $1 billion; and changes to Utzon’s design for the precast ‘skirts’ around the podium have resulted in $ millions more in repair costs.

The Sydney Opera House and the National Broadband Network have a lot in common. Both were inspirational schemes intended to cause a major change in culture and move society forward. Both were the subject of opportunistic political attack. Neither was well marketed to the wider stakeholder community at the time, very few understood the potential of what was being created (particularly the conservative opposition), and after a change of government both had the fundamental vision compromised to ‘save costs’ and as a result the Opera House lost much of its integrity as a performance venue with poor acoustics and an ineffective use of space.

Hopefully over the next 10 years $1 billion may solve most of the problems caused by the short sighted ‘cost savings’ in the finishing of the Opera House so it can at last achieve its full potential. The tragedy is repairing the damage done by the short term cost savings and compromises in design to appease vested interests are likely to cost 30 to 40 times the amount saved.

I’m wondering how much future telecommunication users will have to pay to drag the sub-standard NBN (National Broadband Network) we are now getting back to the levels intended in the original concept. The cost savings are focused on doing just enough to meet the needs of the 20th century such as telephony and quick movie downloads – simple things that politicians can understand. Unfortunately the damage this backward looking simplistic view will do to the opportunities to develop totally new businesses and ways of working that could have been facilitated by the original NBN concept of universal fibre to the premises will not be able to be measured for 20 to 30 years. Envisioning what might be requires a different mind set and a spark of genius.

In both the situations discussed in the blog, and when looking at the next bold concept proposed by a different ‘visionary’, the challenge will still be answering the opening question. How can businesses, bureaucracies and politicians learn to manage genius and properly assess a visionary multi-generational project to achieve the best overall outcome? There’s no easy answer to this question.