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July 2009 Archives

When Leadership Initiatives Conflict

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In my last post I said "conflicting leadership initiatives" was one of the factors leading to current overhead reductions at my company. Let me explain. Conflicting initiatives arise from the fact that senior managers do not want to trade off anything from the cost-performance-schedule iron triangle (low resource commitment with high payoff expectation which is to be delivered right now).

A decade ago, senior management got excited about agile methodologies. Instead of rushing out to do a complete makeover and implementation, the company started with small but safe pilot programs, and the results were promising.

Based on these early successes, agile methodologies were then mandated to several large key programs. But this agile mandate failed to account for the scalability of the results and project size, and these large programs soon ran into issues. (Our large projects have geographically dispersed teams including various tiers of sub-contractors and suppliers and the initial pilot programs did not model this type of project profile.)

Significant problems began to affect the company bottom line. And as soon as that happened, program managers dropped the agile mandate like a sack of potatoes and focused on fixing issues and steering their programs back to some level of stability.

Now we are in the middle of CMMI level 3 certification. Much money had to be diverted into fixing many of the gaps caused by the decades-long agile experiment. For instance, our program portfolio consists of a mixture of traditional waterfall, agile and even ad hoc projects that would prevent our business unit from reaching level 3--and not reaching it that level is simply not an option.

Project Controls & Communication

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Describing scheduling, earned value management (EVM) and financial management as "project controls" is, I would suggest, dangerous!  

The steering mechanism on a car is a control system. You move the steering wheel, and the front wheels turn and if the car is in motion, its direction of travel is altered. Control systems cause a change.  

Altering the duration of a task in a schedule, or calculating the current cost performance index and estimate at completion for an EVM report changes nothing. All you have is new data.

If the data is going to cause a change, it needs to be communicated to the right people. They need to receive, understand and believe the data--this changes the data into information. Then they need to use this new information to change their future behaviors.

This is a communication process. The challenge facing schedulers and other controls staff is recognizing their primary role is communication not controls. Certainly they need to be able to gather and process information effectively but this is wasted effort without equally effective communication.

Other challenges include:
•    Identifying the right people to communicate with--the project manger is the only one
•    Formatting the data in a way that can be easily understood by the receiver. Without understanding, there will be no action.
•    Focusing the information on what matters in the future

No one can change the past and it's always too late to change the present. The only value a project control tool can offer is to influence future actions and decisions. This requires making schedules, cost plans and the like as simple as possible to improve communication and facilitate understanding by the project team.  

Only after the project team fully understands the information can you expect them to use the information to make wise decisions about future actions.

Setting Portfolio Direction

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Portfolio direction is how an organization decides to invest its resources in different types of activities. Portfolio direction sits above the project portfolio--covering all the organization's activities.

The first step in portfolio direction is to identify the organization's main activities.

Here are the three main types:
•    Change actions (for example strategic programs, change projects)
•    Incremental actions (for example improvement projects, systems updating, continuous improvement)
•    Ongoing actions (for example administration, operations and maintenance)

Many organizations also consider mandatory actions (such as conformity projects or regulatory requirements) as a distinct type of activity. However the organization divides its activities, it is important that there be no overlap between activities and that every area is covered.

The decision to invest in a portfolio direction is highly dependent on the organization's corporate strategy. For example, if the organization is in a turbulent environment and needs to be highly responsive, it will invest more in change activities. If, on the opposite end of the spectrum, it is in a stable environment and occupies a good market position, it will invest more in ongoing activities. If the investment strategy is not clear from the start, the organization will invest its resources in activities that will not support its strategy.

Once the organization has decided which percentage of its resources it should invest in changes--incremental and ongoing--it must develop selection criteria that these actions should fulfill. For example, criteria might indicate that change actions must support market penetration, a strategic initiative or help resolve a significant issue.

In general, every investment decision of the portfolio direction should ultimately increase the organization's responsiveness and competitiveness.

Preventing Project Fraud

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Have you ever experienced project fraud? Examples include:

Time theft: Team members charging for time they didn't spend on a project or overlapping time on multiple projects

Resource theft: Loss of physical resources, such as software or hardware, or use of project resources for activities not in the project scope

Conflict of interest: Any kind of subcontracting to or employment of resources based on friendships or connections rather than skill sets required for the project

So how can project fraud be prevented?

One way is to have clear policies and procedures for resource utilization, and processes for timesheet management, recording, charging and justifying time.

Implementing internal controls for managing and reporting on project progress and utilization of resources can also help.

Many elements of fraud cease to exist when you use weekly report cards on key project reporting elements: budget, time and scope. Reporting on resource usage based on project activities can show and account for time charged quickly and with clarity as to where and how resources are used.

Keeping track of the entire project inventory with a systematic approach can reduce or eliminate resource theft. Sometimes it's a matter of implementing processes that simply do not allow for resource misappropriation. For instance, sometimes it can be easier to manage consultants than members of the permanent staff. Why? Because there's a forced process to account for time spent.

Some organizations also require permanent/full time staff to report time spent on projects. This allows for a more controlled use of time, as resources, regardless of what field they are working in, will be accountable for the time they put in.

What other types of project fraud have you seen and what are your recommendations for combating them?

The Double Paycheck

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Organizations always seem to be looking for ways to keep major talent engaged and loyal. Simple as it sounds, they need look no further than making sure that they have created a culture of appreciation.

I have heard acknowledgments referred to as "the double paycheck," which I think is very fitting. Even people who earn less than they feel they should,  will dig in and engage fully if that other "paycheck" comes regularly.

After a presentation I made to the PMI Information Systems Specific Interest Group last year at its Professional Development Day, a woman came up to me and told me that she had just left a high-paying, senior-level job, with no other job lined up.

She left it, she said, because she hadn't realized that her former job at Booz Allen Hamilton was really a dream job. Although it probably wasn't the best job in the world, there was a culture of appreciation at that company that made it a pleasure to come to work each day.

"I am going back there," she said emphatically. "Even if the job pays less and the level is lower, I don't care. I didn't realize what a difference the atmosphere of a company makes. At the job [after Booz Allen Hamilton], I didn't know my worth or my value and I didn't feel appreciated for anything that I did. I'm going back to Booz Allen Hamilton, no matter what."

I later discussed this example with a Booz Allen Hamilton partner. "Oh," she laughed. "We call those the 'come-back kids' and we welcome them back once they realize what they were missing."

And yes, it is a part of the company's philosophy and its mission to have a culture of appreciation. They most certainly seem to be doing something right.

So what is that double paycheck worth? Everything!

Practitioners Versus Accountants on Earned Value

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Most of my regular readers know I like to take accountants to task for pretending to be able to deliver cost performance or estimate-at-completion information to decision-makers based on generally accepted accounting principles. But that door swings both ways: Earned value practitioners are also guilty of trying to further their technical agenda using the resource managers' arguments and analysis, which, in my opinion, is profoundly flawed.

The most prominent of these tactics is to try to justify the cost--or even the existence--of the project management office by running some sort of ROI analysis. This is simply illogical if for no other reason than the ROI calculation pertains to assets, not capabilities.

Less notorious but every bit as pernicious is the tendency of earned value practitioners and accountants to compare the time-phased budget's basis of estimate document with its associated actual costs at the line-item level.

In the earned value world, comparing budgets to actuals is worse than useless: It's actually misleading.

And yet, some practitioners seem to think that if such an analysis were simply done at a very detailed level, it would suddenly become relevant. It doesn't.

Oh, they may try to make some lame argument about the need to benchmark the estimators' work, but this assertion lacks validity that can be demonstrated in the following scenario:

A US$100,000 task is estimated to require US$25,000 in heavy equipment and US$75,000 in labor. At task end, US$74,000 was spent in heavy equipment and US$25,000 was spent in labor. An earned value management system correctly--would not raise the red flag for cost performance, but the system that compares budgets to actuals would erroneously report a severe problem--never mind that the task came in under budget.

Any management information system that reports a phantom cost performance problem isn't good for very much.

Next up:  The absurdity of maintaining milestone lists in lieu of real schedules.

Communicating Up and Down

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In most organizations project managers need to be skilled in both communicating downward to motivate their project teams and communicating upward to influence their managers. Yet while inefficient communication with  team members comes with its own set of issues, ineffective communication with senior management may put the whole project at risk.

Senior managers today generally operate in "command and control" mode, and most organizational processes support this view. Despite theories of team motivation based on empowerment, delegation and job enrichment, control is still the favorite with most senior management.

Project managers need to develop the skills needed to advise upward effectively. In so doing, they must align the project's objectives with the organization's strategic objectives and, more importantly, ensure the key senior managers appreciate this fact and contribute to the project's success.

The key is helping your boss look good.

This can be achieved by providing good information and analysis for decision-making; never escalating a problem or issue without options and recommendations for a resolution; and always communicating in business language with an understanding of the manager's business drivers.

A cooperative, supportive relationship is a two-way street. Project managers need to earn the respect and support of senior managers by adopting a positive approach to communicating up the ladder. Some positive options include providing helpful notes to assist the manager deal with difficult situations, and providing a full analysis of the recommendations and options for resolving issues or making decisions.

Advising upward or helping your manager help you requires a long-term view. There is no silver bullet! You must build credibility over time by developing and maintaining a reputation for being ethical, efficient and open. And above all you must be an effective project manager in your space and a supportive team player in your manager's space.

Loss Indicators

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Originally I'd planned to write about facilitation but then I learned our team will be experiencing a 30 percent staff reduction.

And instead of going out of town, I'll be sticking around, helping management with planning and execution of the reduction. Here are my thoughts ...

In any business, there are cycles. In our particular department, we are chartered to provide services and products to internal customers who provide services/products to the external customers that pay our bills.

In our case, our staff reduction is really a leading indicator of what may be coming down the road. Several factors leading to the current overhead reduction include:

•    Inability to capture key business pursuits (in management speak, the must-win proposals turned out to be losers)
•    Too much reliance on traditional customer base--which is getting poorer each year
•    Lack of will to follow through
•    Conflicting leadership initiatives

What's happening within your work environment? Are you still experiencing these kinds of staff reductions?

Be sure to read my next post and I will explain what I mean by conflicting leadership initiatives.

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