Fine Tune your detectors

The quality of any decision you make is determined by the quality of the information and advice you receive. Good information does not necessarily mean a good decision, but bad information will almost certainly lead to a bad decision.

The decision making process and the types of decision a project manager, and almost anybody else, has to make are discussed in WP1053 Decision Making.  The closely aligned process of problem solving in WP1013. Good information and advice is an essential input to both of these processes.

The right information has the potential to reduce or remove the uncertainty at the centre of every decision. If you are lucky and the information or advice removes all of the uncertainty, then there is nothing left to decide! Usually even with good advice, there is still some uncertainty and you still have to make the decision.

In reality, we rarely if ever have enough information; the challenge is to get as much information as is sensible in the circumstances and then make a timely decision accepting there will inevitably be gaps in your knowledge potentially leading to suboptimal outcomes.

However, simply collecting vast quantities of information does not help (unless you are using data mining). Generally information has no value, unless it has the potential to change your decision! The critical thing in decision making is having the key elements of information available when needed, in a useful form, which improves your awareness of the situation and your ability to decide.

But no information or advice is perfect. Before making use of any information, the decision maker has to evaluate the reliability and accuracy of the information or advice and look for any vested interests or bias on the part of the people developing the information or proposing the advice. Good decision makers usually have very finely tuned ‘bull s**t’ detectors.  And whilst this skill often seems to be innate to an individual many of the skills can be learned.

Some of the elements to consider when weighing up information are:

1. As a starting point, everyone is biased and most people have vested interests. The antidote to bias and vested interests are to consider what effect these influences may have. The more effort someone has committed to developing a set of information, the greater their vested stake in the work. See more on Biases.
2. Beware of factoids!
   You will be pleased to know, you are one of the 1635 people who have read this post, and as a consequence are now aware of factoids.How do we know this? We don’t. I just made it up; but you can’t call me wrong, because you don’t know, either. A factoid is something that looks like a very precise fact. The antidote to factoids is source information. Good source information in the statement above would be ‘our web counter shows that you are visitor 1635 to this page’. Start worrying if the source is nebulous ‘our webmaster advises’ or ‘based on a sophisticated time related algorithm…’.
3. Beware of false precision.
   Almost everything that affects project decisions is a guess, assessment or estimate (the terms are largely synonymous) about something that may occur in the future But no one has precise information about the future! False precision damages credibility (see: Is what you heard what I meant?) and is generally less than useful.  The antidote to false precision is to ask for ranges and the basis of the range statement.
4. Lies, dam lies and statistics 1.
   Some statistics result from the counting of real things. If you trust the people who do the counting, the math and the reporting, the data is as good as you are going to get. However, most statistics are estimates for a large population, derived from the extrapolation of the results from a small sample. Professional statisticians and pollsters attach a calculated margin of error to their work – this margin is important!  The antidote to false statistics is to ignore any that do not come with a statement of the margin for error and how this was derived.
5. Lies, dam lies and statistics 2.
   Understand the basis for comparison – it is very easy to distort information. Project A will increase the profit on the sale of widgets by 50% whereas project B will only increase the profit on our training business by 10%, if both projects involve a similar cost outlay which one is best??? You need to know the basis for comparison to answer the question: a 50% increase in profits from a base of $100,000 = $50,000 which is half the value of a 10% increase in profits from a base of $1 million.  The antidote to statistical distortion is to largely ignore percent changes and statements such as ‘fastest growing’, ‘biggest increase’, etc.  It is always easier to be the ‘biggest’ if your starting point is the smallest.
6. The ‘one-in-a-million’ problem
   Discussed in The role of ‘sentinels’ many ‘one-off’ problems are symptoms of a much deeper issue. Our entire working life is less than 20,000 days so the chances of you encountering a genuine ‘one-in-a-million’ event, just once in your working life, is about 2%. Other phrases that should trigger concern include; ‘she’ll be right’, ‘no-problems’, ‘it’s easy’, etc…The antidote to these type of expression is to simply reverse the statement:
   – one-off / one-in-a-million = there’s probably a structural cause to be discovered;
   – she’ll be right = I have no idea how to fix it (and its definitely not OK);
   – no-problems = this is a major problem for me;
   – it’s easy = this will be very difficult (unless the ‘easy’ is followed by an explanation of how it is easy).
7. The false prophet
   False prophecies are allegations and unsubstantiated statements made with the expectation that the ‘expertise’ of the person the statement is attributed to will cover the statement with absolute credibility. If the statement is improbable, it is improbable regardless of the alleged source.  The antidote to false profits being quoted in the ‘third party’; eg, “Einstein said controlled nuclear fusion was easy”; is simply to seek authentication from the source. If the ‘prophet’ is present, ask them for more information.  Real experts know both the upside and the down side of any course of action they are proposing – they understand the uncertainty. Wannabe experts pretend there is no downside or uncertainty.

8. Well known facts
   Remember, most ‘well known facts’ are in fact commonly held misconceptions (this statement is a factoid but also useful).  The antidote to ‘well know facts’ is to dig deeper and gather actual facts.

These are just a few ways bad advice and information can be introduced into a decision making process. Taking a few minutes to verify the quality of the advice you are being given, ditch the unsound advice and information, and then use what’s left to inform the decision will enhance the probability of making the best decision in the circumstances.  This is not easy to do (but good decisions are rarely ‘easy’); the consolation is once you develop a reputation for having a good ‘bull s**t’ detector, most sensible people will stop trying to use it on you. Then all you need to do is make the right decision.

Stakeholders in complexity

The new CPM is ‘Complex Project Management’ and whilst most of the current project management tools and practices including risk management, scheduling and EVM remain important, they are not sufficient to successfully manage a complex project according to Stephen Hayes, from the Canberra based International Centre for Complex Project Management ICCPM.

ICCPM Ltd was established by Australian, UK and US government bodies and major defence industry corporations, and is now a substantial network of global corporate, government, academic and professional organisations committed to the better management of complex projects across all industry and government sectors focused on improving the success of complex projects.

Whilst all projects have a degree of complexity (see: Project Size and Categorisation) CPM is focused on the major projects undertaken in response to ill-defined and often mutually-incompatible stakeholder requirements and are subject to uncontrollable external influences and almost continuous change.

Successfully managing this type of project needs outcome focused leadership that is capable of developing context specific innovative approaches to issues backed by the tenacity to deliver ‘no matter what’!

The latest report facilitated by ICCPM in conjunction with Global Access Partners and a range of leading public and private sector organisations is entitled “Complex Project Management: Global Perspectives and the Strategic Agenda to 2025” (available from https://iccpm.com/).

This report has developed a framework for on-going research into CPM under six broad themes:

• Delivery leadership – the ability to navigate through uncertainty and ambiguity to achieve the desired outcome.
• Collaboration – working as one team to a mutually agreed goal and equitable reward (including operating the entire supply chain as a single entity).
• Benefits realisation – understanding and delivering through-life product value.
• Risk, opportunity and resilience – taking good risk, seizing emergent opportunity, and successfully responding to the unexpected.
• Culture communication and relationships – maximising the effectiveness of the human asset by understanding and responding to human behavioural need.
• Sustainability and education – continuous learning, maintaining currency in leadership capability and knowledge transfer across generational boundaries in order to sustain through-life capability.

Against each of these a basic set of policies and actions have been developed to define the future work and research agenda of ICCPM, its partners and academia.  To this end ICCPM is working to develop a permanent, co-ordinated global specialist research agenda for CPM.

With support from the UK Cabinet Office, the Australian Government, universities including QUT and DAU, professional associations including IPMA and APM, and companies such as BAE Systems and Thales (to name but a few) this initiative may prove successful.  Two glaring omissions from the list of supporters though are the AIPM and PMI – maybe this blog will trigger some action.

Certainly the emergence of stakeholders at the centre of complexity means stakeholder management and engagement will be a topic of increasing importance which is only to be encouraged.

Note: The contents of this post are based on the executive summary of the ICCPM – GAP CPM Task Force report: www.iccpm.com

The social dynamics of governance – Bullying and Pressure Projects

A number of current news items have highlighted the complexity and interconnectedness of governance in organisations. The blog post is going to draw together four elements – high pressure projects, bullying, the need for organisations to provide a safe workplace and the need to support people with mental illness; all of which have interconnected governance implications.

To lay the foundation for this post, the interconnected nature of governance has been discussed in our post Governance -v- Management: A Functional Perspective and is best displayed in this ‘petal diagram’

The catalyst for this post are some recent changes in Australian workplace legislation that is forcing all types of organisations to consider how they manage the mental health of their paid and volunteer workforce.  In essence these codified requirements are no different to the pre-existing requirements to protect the physical wellbeing of the workforce and others interacting with the organisation, the only difference is mental heath and wellbeing are now overtly covered.

The new uniform national workplace health and safety laws require employers to ensure that workplaces are physically and mentally safe and healthy, and the work environment does not cause mental ill-health or aggravate existing conditions.  Under these harmonised laws ‘reckless conduct’ offences incur penalties of up to $3 million for corporations and $600,000 and/or 5 years jail for individuals.

 

These challenges cannot be avoided; it remains illegal to discriminate against individuals on the grounds of disability, including mental disability, in the same way it is illegal to discriminate on the grounds of age, sex, race, and religious and other beliefs.

These are not trivial issues as the  $230,000 penalty (fines and costs) awarded  by the Victorian Supreme Court against the former operator of a commercial laundry for ‘workplace abuse’ and the  reputations damage suffered by CSIRO (Australia’s premier scientific research organisation), over on-going bullying allegations demonstrate.

There is a growing awareness of psychological hazards in the workplace including bullying, harassment and fatigue; and the consequences of organisational failures in this area can extend well beyond the strict legal liabilities.  To avoid prosecution and reputational damage, organisations are increasingly being required to take proactive, preventative actions and implement a culture, reinforced by effectively implemented policies to manage these aspects of workplace health and safety. Attitudes are slow to change and creating a culture that properly respects and protects mental wellbeing will require a sustained focus at the governance levels of the organisation as well as in the day-to-day management of the work place.

The payback for good governance and effective management in this area is that organisations that promote good mental health in the workplace are seen as great places to work, and have higher levels of productivity, performance, creativity, and staff retention, and tend to financially outperform other less well governed organisations. These are very similar findings to organisations that actively support and embrace ‘Corporate Social Responsibility (CSR) – apparently the good guys finish first (not last)!!

However, managing this change is not going to be simple!  Organisations are under ever increasing pressure to adapt to a rapidly changing environment and to produce ‘more with less’ to survive. One of the key capabilities enabling quick and effective strategic change is the domain of project and program management. In response to these organisational pressures, project managers are increasingly being placed under stress to be faster, cheaper and better and to deliver the new capability or ‘thing’ in record time.  Couple this to the mistaken belief of some managers that setting ‘stretch targets’ is a way to motivate workers (even though sustained failure is known to be a major cause of stress and demotivation) and you end up with a classic governance dilemma.

Deciding how to best balance these competing demands require an overarching governance policy supported by a sympathetic implementation by management to achieve both a safe work environment and an effective management outcome.  In the absence of effective governance managers are left to sort out their own priorities and frequently are driven by short term KPIs focused on easy to measure cost and time performance criteria. In these circumstances concern for performance frequently outweighs concern for people.

These issues are compounded by the fact that far too many middle and project managers lack effective people skills and can easily drift from pushing for performance to micro management to outright bullying. The mental wellbeing risks include applying undue pressure to perform that induces stress leading to depression; as well as more overt acts of aggression and bullying. The Australian Fair Work Amendment Bill of 2013 defines workplace bullying as ‘repeated, unreasonable behaviour directed towards a worker or group of workers that creates a risk to health or safety’.

Unfortunately, at least in the Australian context, bullying is a major unreported problem. A recent survey by the University of Sydney (see the report summary) has found that workplace bullying tends to be peer-to-peer and occurs at all levels of organisations. Most incidents occur within the presence of one’s peers, including bullying in meetings and other managers are unlikely to intervene. The problem is insidious, nearly 50% of the survey respondents reported bullying in the last year, and only 16% organisation assisted the situation when the problem was reported. But, ignoring the issue is a high risk strategy.

All types of organisation need to develop focused strategies to reduce the opportunities for bullying to occur at every level from the board room table down to the shop floor; and to policies backed by procedures to deal with bullying effectively when it does occur, in ways that support the victims. Bullying is illegal, causing damage to a person’s mental health is illegal (and bullying is only one way this can occur) and failing to effectively manage the consequences of mental illness is illegal.

The ongoing damage being caused to CSIRO’s reputation by the publication of the report into bullying within the organisation demonstrates the way these problems can escalate into a major issue for the Board. The on-going publicity associated with potential litigation and prosecutions has a long way to run before the final wash up allows CSIRO to move forward with a clean slate. And, as the CSIRO report suggests, the consequences of breaking the law are likely to be a small part of the overall damage caused governance failures in this important area.

The reason this is primarily a governance issue is the challenge associated with developing a philosophy and culture that empowers management to resolve the dilemma associated with balancing commercial objectives against personal wellbeing objectives – there is no ‘right answer’.  It is all too easy for executives to decide the organisation needs a new capability, managers being tasked to deliver the required outcome with inadequate resources, and the project manager to be given an unreasonably short timeframe for delivery.  The pressure to ‘perform’ inevitably leading to increases in stress, conflict and potentially bulling. But whilst there are many questions, and decisions, there are few clear answers:

• When does the need to perform and work extended hours slip into workplace fatigue and an unsafe work environment?
• When does the project manager’s desire to push team members for maximum performance slip into bullying?
• Who is responsible for creating the unsafe work environment:
  –  The PM operating at the tactical level?
  –  The managers that set the strategic objectives?
  –  The executives who created the overall environment?
  –  The ‘governors’ who failed to offer appropriate leadership?

Good management can certainly alleviate some of the symptoms, but good governance is needed to eliminate the root cause and promote mental wellbeing in the workplace. At least in Australia there are now effective laws to help and the data shows improving this aspect of an organisation is good for business, and of course excellent stakeholder management.

Communicating in a Rapidly Changing World

The challenge faced by everyone is the ever increasing rate of change, driven by new knowledge, new ideas, new management fads and of course new technologies.

As individuals and organisations we need to continually accelerate our rate of learning, and according to Eddie Obeng in his TED presentation ‘Smart failure for a fast-changing world’  the world is now changing at a rate faster than we can assimilate the new information, making errors and mistakes inevitable.

In the old world, a competent person could keep up with ‘all’ of the relevant changes in their area of expertise and be expected to get the ‘right answers’ – in the new world we simply cannot. What was ‘right’ based on the old paradigms is unlikely to be the best answer now or in the future and there’s no way of knowing if your innovative solution to a problem is right or wrong until later. Timely decisions based on assumptions and partial information are essential (see more on decision making). And adaptation and rapid learning from your mistakes is the new normal.

Obviously this is helped by access to useful information. The challenge is sorting ‘useful’ information from the ever expanding ‘noise’ in every aspect of life, within the ever shortening timeframes needed for effective decisions.

One of the clearest depictions of this problem is the ever increasing number of business fads sweeping management:

This ‘fad-o-gram’ is from ‘The Ebbs, Flows and Residual Impact of Business Fads 1950 – 1995’ by R. Pascale. The chart was developed from a statistical analysis of the indexes of the influence of business ideas, calculated by Richard Pascale, using an importance-weighted citation count, admittedly with a significant subjective component.

Looking at an updated version of the chart from 2000 in more detail is interesting:

The first surprise is the number of ‘defunct’ management theories that are still included in the PMP course requirements such as ‘decision trees’, ‘theory x – theory y’, ‘brainstorming’ and ‘management by objectives’. I have a feeling this is more likely to be a factor of the interest in the concept by author’s looking for a new idea to have their academic papers published, or sell their books, than the actual usefulness of the concepts but equally there are literally dozens of fads and fashions that have arrived, been championed as the solution to all known problems and then died.

The second surprise is the omission of ‘project management’ including ‘program management’ and ‘project portfolio management’. Presumably projects were seen by Pascale as planning processes rather then management theory.

From the perspective of management theories and fads, the most telling insight can be ascribed to Peter Drucker who, in 1993 said ‘The most probable assumption is that no currently working ‘business theory’ will be valid ten years hence — at least not without major modifications’.

So where does this leave us as working managers trying to make good decisions in a rapidly changing world? I would suggest decisions based on common sense and pragmatism, founded on experience, are likely to be far more effective than leaping onto the latest management fad both at the project level and higher management levels. Not worrying too much about the latest fad also helps reduce the learning load. And whilst not included in the diagram, there are plenty of project management fads and ‘silver bullet’ techniques being touted on a regular basis.

But we all need access to useful, relevant and current information to develop our knowledge and ground our experience – competency is founded on knowledge!! One of our overriding considerations in developing these blogs, our published papers and our White Papers is to take new concepts and make the ideas both practical and usable. The other which is still a work-in-progress is to develop an indexed structure that makes the information easily accessible and findable (see: http://www.mosaicprojects.com.au/PM-Knowledge_Index.html).

See also our article: Reducing complexity in management communication

Cobb’s Paradox is alive and well

In 1995, Martin Cobb worked for the Secretariat of the Treasury Board of Canada. He attended The Standish Group’s CHAOS University, where the year’s 10 most complex information technology (IT) projects are analysed. The high level of failure led Cobb to state his now famous paradox: “We know why projects fail; we know how to prevent their failure—so why do they still fail?”

In 2011, another report into the management of IT projects asks the same question! This time the report was prepared by the Victorian Government Ombudsman, in consultation with the Victorian Auditor-General, it documents another series of failures largely created by executive management decisions. The report entitled Own Motion Investigation into ICT – Enabled Projects, examines 10 major Victorian Government ICT projects that experienced difficulties such as budget and timeframe blowouts or failure to meet requirements.

Portfolio Management
Problems identified by the Ombudsman in the area of Portfolio management and governance include a lack of effective leadership, accountability and governance. He was particularly concerned about poor project governance, the lack of accountability of project stakeholders and a lack of leadership — a reluctance to take tough decisions.

These failures contributed to poor decision making, and an inability or reluctance to make difficult, but necessary decisions. Leaders lead and determine governance practices; the resources needed to implement these facets of effective Portfolio management are readily available including:

•  PMI’s The Standard for Portfolio Management – 2nd Edition, available in Australia from http://www.mosaicprojects.com.au/Book_Sales.html#PMI, elsewhere from http://marketplace.pmi.org
   
• The Association for Project Management’s Directing Change, a guide to the governance of project management: http://www.mosaicprojects.com.au/PDF/APM%20GoPM%20booklet.pdf

Project Definition
It is impossible to deliver a project successfully if the decision to proceed is based on inaccurate assessments in the business case. The Ombudsman commented on the inadequacy of business cases, the failure to fully define requirements for new systems, a general reluctance to change business processes to better fit with off the shelf products (to reduce cost and risk) and a ‘tick the box’ approach to risk management (ie, avoiding any real assessment of risks and opportunities).

Linked to this lack of definition major project funding decisions were announced publicly before the business case was fully developed (representing either wishful thinking or a wild guess?), and high risk decisions being made to only partially fund some projects.

The solution to these issues is a robust and independent PMO that has the skills and knowledge needed to validate business cased before they go forward to management for decisions. Many years ago, KPMG released a series of reports that highlighted the fact that organisations that failed to invest in effective PMOs were simply burning money! The Ombudsman’s report shows that ‘burning public money’ is still a popular pass time.
– For more on PMOs and to download the KPMG reports see: http://www.mosaicprojects.com.au/Resources_Papers.html#Proj_Off

Risk Management
Many of the factors identified above and in my view the primary cause of most bad decisions is the abject failure of senior management to insist on a rigorous risk management process. Risk management is not about ‘ticking boxes’, it is about having the ethical courage to objectively explore the risks and then take appropriate actions to either mitigate the risk or provide adequate contingencies within the project budget. This failure was manifest by an inconsistent approach to contingency funding. There are many examples of high risk decisions being made without any contingency provisions:

• The Myki ticketing system was let to an organisation that had never delivered a ticketing system before. No contingencies were made for this high risk decision and the project is years late, $millions over budget and will only deliver a small part of the original scope.
   
• Agencies preferred to be on the leading edge rather than leveraging what had been done by others elsewhere. This may be justified but not without proper risk assessment, mitigation and contingency.

Government agencies are not alone in failing to effectively manage risk in ICT procurements. The same problem has been identified in major infrastructure projects, in a series of reports by Blake Dawson; see: Scope for improvement.

There are always difficulties in transferring project risks to vendors, and dealing with large vendors who may be more experienced in contract negotiation than their agency counterparts. Whilst modern forms of contract provide opportunities to adopt innovative procurement processes that could significantly reduce project risks for vendors and customers these were not used.

As our paper, The Meaning of Risk in an Uncertain World and the Blake Dawson reports clearly demonstrate, not only is it impossible to transfer all of the project risk to a vendor, it is totally counterproductive to try! Organisations that try to transfer ‘all of the risk’ end up with a much poorer outcome than those organisations that actively manager the risks in conjunction with their vendors.

Large ICT projects are inherently complex and necessarily involve some significant risks. But these can be mitigated to some degree by taking heed of the Ombudsman’s observations, lessons learnt in other projects and the implementation of robust and independent systems.

The PMI Practice Standard for Risk Management provides  good starting point.

Recommendations
The Ombudsman’s recommendations on how to address these issues can be applied to ICT and other projects undertaken by other state, local and Commonwealth government agencies, and in the private sector: Download the report.

In my opinion, the primary cause of these failings, referenced but not highlighted by the Ombudsman, is cultural. Executives and senior managers overtly preferring the status quo and the current power structures they have succeeded within over leading the implementation of change that will deliver improved outcomes for their organisations but make people more accountable and redistribute organisational power. This was the focus of my last posting; Culture eats strategy for breakfast 2!

As Martin Cobb observed in 1995, “We know why projects fail, we know how to prevent their failure — so why do they still fail?”  Unfortunately this is still a valid question more that 15 years later and, without leadership from the very top, I expect the effect of this report will be little different to the dozens of similar reports generated over the years and we will still be asking the same question in 2020.

The answer is culture and leadership – to change the culture within senior management ranks, the owners of organisations need to take actions similar to the Australian Federal Government and mandate effective processes and then measure performance in their implementation and use. The implementation of the Gershon Report that is being forced through the federal government departments is a Cabinet level initiative. It is still too soon to judge wether the initiative will be successful, effective culture change takes years to embed in major organisations, but at least the push has started at the right level. My feeling is that if the pressure is maintained for another 3 or 4 years (the original report was released in 2008) there may be some real benefits. To avoid similar reports to this one in the future, the leaders of other organisations need to take similar robust, strategic action tailored to the needs of their organisation.

Project professionals can help by effectively communicating to your top-level executives the real benefits of effective project governance. For many ICT and other technical/engineering professionals this represents is a whole new set of skills to learn, my book Advising Upwards may help!

Defining Complex Projects

There has been a lot written about ‘complex project management’ over the last few years much of which as confused projects with programs, complexity with big and complexity with complicated technology. For an overview of complexity theory see: A Simple View of ‘Complexity’ in Project Management.

A sentence in the paper ‘Translation and Convergence in Projects: An Organisational Perspective on Project Success’ (Project Management Journal, Sept.2011) triggered this post and sums up project complexity nicely: “The key difficulty with complex projects is that those managing them will often be ‘feeling their way’ towards a solution rather then following a reliable blueprint or project plan”.

Our view has consistently been that complexity is a function of complexity theory and it is a dimension of every project and program. This means every project has a degree of complexity in the same way that it has a defined size, a degree of technical difficulty and a degree of uncertainty, and all 4 dimensions interact and affect each other.  These four dimensions are discussed in the White Paper at: http://www.mosaicprojects.com.au/WhitePapers/WP1072_Project_Size.pdf.

What the thought from the paper above highlighted is the very close linkage between complexity which we see as being primarily a function of the project’s stakeholder community and the degree of uncertainty associated with the project outcome. The blog post, Projects aren’t projects – Typology outlines one way of measuring uncertainty based on a model by Eddie Obeng.

I’m not sure how to measure this empirically yet, but I do have a feeling there is a need to define a measurement system that incorporates the type of uncertainty within the overall matrix of stakeholder engagement and supportiveness already embedded in the Stakeholder Circle® methodology  – any thoughts will be appreciated.

The implication of bias

Every decision is influenced by a range of preferences and biases. I touched on this subject last month in my ‘Voices on Project Management’ post for PMI (see the post) but the effect extends to every cost and time estimate, the way every communication is received and understood and every decision.

As part of our work to upgrade Mosaic’s PMP materials to align with the new PMP Role Delineation Study, we have developed a White Paper focused on the causes of bias including our innate cognitive biases, learned biases and emotional affective factors.

It is impossible to remove many of these biases; but being aware of them allows their effects to be mitigated. Download the White Paper from: http://www.mosaicprojects.com.au/WhitePapers/WP1069_Bias.pdf

Guide to Good Practice in the Management of Time in Complex Projects

Wiley and the Chartered Institute of Building have just published a new book, the Guide to Good Practice in the Management of Time in Complex Projects. The primary purpose of this Guide is to set down the standards necessary to facilitate the effective and competent management of time in complex projects. It defines the standards by which project schedules will be prepared, quality controlled, updated, reviewed and revised in practice and describes the standards of performance which should reasonably be required of a project scheduler.

Delayed completion affects IT, process plant, oil and gas, civil engineering, shipbuilding and marine work contracts. In fact it affects all industries in all countries and the bigger the project, the more damage delayed completion causes to costs, to reputation and sometimes, even to the survival of the contracting parties themselves.

In simple projects, time can be managed intuitively by any reasonably competent person, but complex projects cannot and a more analytical approach is necessary if the project is to succeed. Although much has been written about how to apportion liability for delay after a project has gone wrong there was, until recently, no guidance on how to manage time pro-actively and effectively on complex projects.

The Guide has been developed as a scheduling reference document capable of wide application. It is a practical treatise on the processes to be followed and standards to be achieved in effective management of time. It can be used in any jurisdiction, under any form of contract, with any type of project and should be identified as the required standard for the preparation and updating of contract programmes, progress reporting and time management.

I may be biased, my partner was part of the team that developed The Guide and it recognises the importance of involving stakeholders in the development of the schedule, but I feel it has a lot to offer project planners and schedulers on any type of project.

For more information;
in Australia see: http://www.mosaicprojects.com.au/Books.html#CIOB_Guide elsewhere, http://eu.wiley.com/WileyCDA/WileyTitle/productCd-144433493X.html

Using a Risk Management approach for Assessing Claims

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

Motivation

One of the key skills required by project managers, in fact all managers, is the ability to motivate team members and the wider stakeholder community.

Most business approaches to motivation are based on extrinsic motivators – if you achieve ‘A’ we will reward you with ‘B’ and if you are really good and make ‘2A’ we will give you ‘2B’. The theory used by business is based on the assumption the larger the reward the greater the motivation; provided basic principles such as fairness are applied and the reward is commensurate with the effort needed and expectations of the person being motivated. It is assume the increase in motivation will flow through to increased performance.

Management scientists way back to Henry Gantt had established that in the ‘carrot-and-stick’ approach to motivation, fear and the ‘stick’ had little effect, the ‘carrot’ and reward had measureable effect. However, these studies were applied to manual workers.

More recent work by researchers such as Hertzberg in his ‘Hygiene Theory’ (1959) and Maslow’s pyramid of need (1943) placed salary (wages/reward/income) relatively low down the list of motivators. As long as the ‘pay’ was what was expected it had little extra value; inadequate rewards could quickly de-motivate, but once adequate levels were reached ‘pay’ simply came off of the table. This is a basic part of our PMP courses, hardly new or exciting….

However, I have just watched a fascinating video on TED, by Dan Pink, on the surprising science of motivation: starting with a fact that social scientists know but most managers don’t: Traditional rewards aren’t always as effective as we think.

A brief summary of the presentation is that traditional rewards do work for simple manual tasks. However, as soon as creative thinking is needed extrinsic rewards have the opposite effect by focusing effort in a narrow band and stopping the more creative thinking needed to solve the problem. The results are measurable negative performance, increasing as the reward increases.

According to Pink, the motivators that do work are intrinsic:

• Autonomy: control and self-direction over the work.
• Mastery: the ability to excel at the work by getting better and better at difficult tasks.
• Purpose: the work contributes value to the organisation and others (in the service of something larger).

These motivators are very similar to the ideas of Maslow and Hertzberg briefly discussed above, and McGregor (Theory X, Theory Y – 1960). What’s fascinating in Pink’s presentation is the fact most organisations reward their senior decision makers with huge pay bonuses to solve some of society’s most difficult problems (and wonder why they fail so often…).

To see the presentation, go to the TED website at: http://www.ted.com/talks/lang/eng/dan_pink_on_motivation.html – whilst there it is well worth browsing, there are dozens of other fascinating presentations.