Part four of my taking-on-the-myths series will challenge our statistically minded segments: the risk managers.
Myth 4: Using Monte Carlo simulations to generate contingency budgets or schedules is an appropriate approach and should be more widely adapted.
Truth: Monte Carlo simulations are needlessly complex and shouldn't be used.
Of the three most common risk analysis methods used in creating a contingency schedule or budget--risk classification, decision tree analysis or Monte Carlo analysis--the latter is by far the most complex, so naturally it has the reputation for being the most robust.
But is it really?
Consider the data points your Monte Carlo simulation driver asks of you: original budget (or duration), one or two "things-going-wrong" alternatives, their odds and costs, and at least one "things-go-great" scenario, with its odds and estimated costs.
This is the exact same data set that would support a single-tiered decision tree analysis, except that the Monte Carlo version invokes a random-number generator to fill in hundreds (or even thousands) of other data points, which can then be used to analyze confidence intervals--at least supposedly.
But all of these other data points are artificial! The ensuing confidence intervals are far from reliable, hoopla notwithstanding.
Myth 3: Risk management is so important to project management that it should be employed throughout the project's life cycle.
Truth: After the baseline is set, formal risk management is pretty useless.
This last assertion is guaranteed to invoke a passionate debate, but consider your personal performance. Do you function better when you are confident or when you are worried? And what does formal risk management bring to the table once the project is underway, other than institutional worrying?
Analyzing ominous trends or performance information indicating a problem in order to head off threats to project success is what project managers do on a daily basis. Spending excess time quantifying those threats doesn't improve your odds of success.
In my last post challenging project management myths, one responder noted that I was unclear about what part described the myth and what part described the challenge statement. Here are numbers 5 and 6 on the hit parade, with the parts a bit better defined.
Myth 6: Complete and detailed procedures are an essential part of a successful project control system implementation.
Truth: Writing procedures are generally a waste of time and they don't help advance project management maturity.
Think about it, is there anything in the universe easier to ignore than a document? But the myth persists that procedures by themselves can advance an organization's project management capability.
Usually these procedures are signed by a high-ranking member of the organization, who is attempting to compel obedience or participation in the project control system.
But unless the organization has authorized someone to actually fire or demote others for failure to comply with the document--which happens rarely if ever--then the procedures themselves won't help.
Myth 5: If a schedule based on the critical path method isn't available, a good interim step to manage a project's schedule is to create a list of milestones or action items and meet to review them on a regular basis.
Truth: Action item lists and milestone databases are essentially polls and have no place in legitimate management information systems.
I once worked on a major program in which participants entered project data into a milestone database and provided monthly updates to those milestones.
At the beginning of the year, all of the milestones were scored "green," meaning the milestone would be met on time.
Byabout the ninth month, a few "yellows" would show up in the status column, indicating a possible delay.
More yellows would show up in month 10, followed by even more in month 11 along with a few "reds," indicating the milestone would be missed for that fiscal year.
By the last month, easily half of the milestones were either red or yellow. Lots of scolding and badgering would then ensue, followed by a new "baseline" for the next fiscal year, and-- shazaam!--all the milestones would be green again.
Asking participants what they think of their performance is not a performance management system -- it's a poll. And polls are not substitute for real management information systems.
I look forward to your responses because I know a whole bunch of people are going to disagree with these two.