I’ve recently heard some very compelling points with regards to the systemic nature of projects. Perhaps the most poignant concept is the realization that the sum of project overruns is often greater than its parts. I know that, in hindsight, it is difficult to explain how any one change, or the uncertainty in a single arena, could have led to the final outcome. Rather, it’s the impact of the cause of the overrun, multiplied through feedback mechanisms, and by the resulting negative effect on areas of the project that may not be directly linked to the initial difficulty.
The key villains that drive cost escalation are the project organization and the clients themselves. Of course, external forces such as the changes in the regulatory environment or advances in technology can have an impact. However, even though the consequences, in terms of increased costs, may be more severe from external changes, the likelihood of occurrence is usually low (although the longer the duration of the project, the more critical this area becomes), so I wouldn’t consider it a “key” villain.
Systemicity is really an embedded reality for projects. In and of itself, the systemic structure of a project doesn’t drive cost escalation – it simply magnifies it and helps to create “vicious” or “virtuous” circles. So although it’s worth discussion and is a cause of the sum being greater than the parts, it’s not really a key villain when discussing cost overruns. Neither is schedule acceleration, because it is a reaction to project trouble, not a direct cause.
The factors that cause cost overruns, and contribute to large-scale cost escalations, typically include the planning (or control) estimate, customer interference, and customer or contractor created changes to the project plan. These cause the initial difficulties, and act as a root cause for cost escalation. These stages are usually foreseeable, and are controllable, by the two key villains I mentioned above – the project organization and the customer organization.
The real causes of cost escalation during these stages are usually the customer’s failure to provide thorough information during the planning stages, or their inability to “help” the contractor execute the project. Or it may be the contractor’s failure to follow proper configuration management techniques, or ensure a “meeting of the minds” on key project specifications. Failure by both organizations to manage these types of problems throughout the project will lead to cost escalation for each arena, and give rise to the systemic and acceleration stages that will make the team look back and wonder what happened.
Saturday, February 6, 2010
Monday, October 19, 2009
An Analysis of Organizational Structure
For this post, I analyzed a regional consulting firm that has been having some growing pains. This analysis allowed me to see that the structure of the organization was significantly contributing to their problems, and would have to be changed if they hoped to improve their PM processes and operational efficiency.The graphic allows us to see that while each member of the firm's set (functional areas) is integrated, overall communication throughout the organization is lacking. The concentration of authority and customer contact across the two major hubs (lead technician and business consultant) also presents problems in terms of resource allocation - first, by potentially overextending each hub as business grows (creating bottlenecks); and second, by creating separate factions that may not operate in a unified fashion.
This structure does not facilitate collaboration among the various groups: because of the “stovepipe” reporting structure, and the independent mindset among the functional areas (i.e. marketing operates one way with consulting clients, while the helpdesk uses their own procedures with services clients). With the functional departments empowered to manage and complete isolated projects within their “stovepipe,” there are relatively few issues for small clients with specific needs (which is why this was not a serious issue in the past). However, as the client base shifts, the efforts of more than one department will be required to develop and implement comprehensive programs – efforts that cannot be effectively managed with the existing structure.
From a PM standpoint, as this shift occurs, the functional webs converging on the two main hubs limit overall cooperation throughout the organization and with other key stakeholders. With communication and decision-making authority lying outside of the project structure, because there is no true project manager, the project team and functional managers are removed from the needs analysis, and no one maintains accountability for aggregate team and project performance. When looking specifically at the project planning process and scope definition, this structure would limit the authority and decision-making capability of a project manager. It also serves to erect barriers to teamwork, and results in disparate objectives among “competing” functional areas.
This need for better internal communication, and the division of business and technical personnel, coupled with the lack of a single project manager for large projects, makes it harder to garner scope agreement and create an all-inclusive project plan internally; even before solutions are presented to clients. With no internal consensus on what the scope or plan of action will be, it is impossible to approach the customer as a unified organization with full-spectrum expertise.
Since the firm has moved towards larger and more complex projects, their lack of sophistication and failure to create scope definitions and management plans based on key stakeholder consensus has been very difficult to overcome. As we can see, their organizational structure contributes significantly to this problem.
Thursday, July 30, 2009
The "Theory" of Project Management
Generally speaking, a theory is a set of related ideas, principles and techniques that apply to a particular subject. Theories are typically used to explain a set of observations, and can provide us with an expectation of what should happen, barring unforeseen circumstances. However, the underlying theory of project management is somewhat implicit in nature. In other words, projects don't play themselves out systematically like mathematics or logic. What works in Project A will not necessarily succeed in Project B. The transitive property of mathematics is rarely observed in projects.
For that reason, some discussion of the conceptualizations behind the theory is warranted before discussing the fundamental considerations. The benefits of using a theory, in the context of conducting a project, are that the practical actions derived from the proper implementation of the theory can help us achieve our goals. I would start by establishing three levels of goals for any project: first, there is the general goal of getting the intended deliverable completed; second, there are technical (or internal) goals, such as cost minimization and adhering to a schedule, that means the project has been done right; and third, there are customer satisfaction (or external) goals, such as quality and functional utility, that means the right project was done right. By applying project management theory, we can (hopefully) dramatically improve the likelihood of reaching the third, and ultimate, goal.
To begin, project management is about managing work. Turner (1993), claims that work can be managed by decomposing total work into activities and tasks – that’s the basic concept. As the PMBOK Guide shows, these activities and tasks are the unit of analysis in the core processes of project management, such as scope management, time management, and cost management. Morris (1994) supports this description by outlining a project management approach based on four steps: first, what needs to be done; second, who is going to do what; third, when actions are to be performed; and fourth, how much is required to be spent in total, how much has been spent so far, and how much still has to be spent. Central to this sequence is the Work Breakdown Structure (WBS), which is a key deliverable of the project planning process, and is crucial to scope management and project control.
The PMBOK Guide provides us with a second concept in project management, by laying the groundwork for planning progression. Ten core processes, including scope planning, scope definition, activity definition, resource planning, activity sequencing, estimating, and project plan development, have been identified to guide the planning process. The outputs from these processes are the project plans, which form the inputs to the execution processes. The implication here is that if you effectively complete these steps, you’ll have the necessary inputs for successful execution, which will lead to a successful project.
These two primary concepts – the project as a series of tasks and activities, and the core planning methodologies as guiding principles – can help us understand a general theory of project management, which is thus: by undertaking a series of sequential, yet interrelated, tasks to define, plan, prepare and execute a project, you will be able to effectively achieve technical success and customer acceptance.
Although this theory sounds relatively simple, we often find that organizations have trouble putting the concepts into practice. Some of the key reasons are a combination of limited resources, lack of understanding, and the perception that there are no immediate financial benefits to justify the time spent on project management (i.e. it’s a cost-center). More specifically, young organizations view formal project management as overly bureaucratic, and as a hindrance to getting business done. Yet, these organizations are the ones who can most benefit from the application of theories that improve structure and accountability – which are direct results of the two key concepts discussed above.
Additionally, the theory of project management helps organizations gain efficiencies through standardization and streamlining. An organization that understands their own business, by analyzing and consistently following the core processes, can lower costs and enhance service levels. These core processes can be documented, allowing the organization to work on ways to improve the work-flow and customer experience at each stage. This feedback loop creates a virtuous cycle: documenting the steps to produce a deliverable will lead to more consistent application of the processes, which leads to more standardization, then to continuous improvement, and then back to documenting the improved steps.
Furthermore, by increasing consistency, deviation rates will decrease and you will find improvements in predictability – lending credence to the theory suggested above that by breaking a project down into tasks and following the core planning methodologies, we can create a plausible expectation of the outcome. This application of project theory also provides more accurate measures of project progress, which enhances our ability to meet project goals.
By ignoring the fundamentals of project management theory, especially during the planning stages, we find that customer requirements are poorly defined, and the process of clarifying and changing requirements leads to disruption. This is one of the key reasons that projects fail – incomplete or inaccurate scope definition. The constant disruptions cause actual progress to drift from the plan, which becomes too burdensome to regularly update (adding to the perception that project management is overly bureaucratic).
Without an updated plan to work from, informal management becomes prevalent. This causes work to be rushed, which in turn causes tasks to be commenced without all inputs or prerequisites, leading to low efficiency, task interruption, and increased variability (degrading our ability to predict an outcome – hence the importance of the theory). Likewise, controlling by means of a performance baseline that is no longer based on actual status becomes ineffective, or simply counterproductive, and results in the customer needs not being met. When we fail to meet customer needs, it’s impossible for us to achieve project success.
For that reason, some discussion of the conceptualizations behind the theory is warranted before discussing the fundamental considerations. The benefits of using a theory, in the context of conducting a project, are that the practical actions derived from the proper implementation of the theory can help us achieve our goals. I would start by establishing three levels of goals for any project: first, there is the general goal of getting the intended deliverable completed; second, there are technical (or internal) goals, such as cost minimization and adhering to a schedule, that means the project has been done right; and third, there are customer satisfaction (or external) goals, such as quality and functional utility, that means the right project was done right. By applying project management theory, we can (hopefully) dramatically improve the likelihood of reaching the third, and ultimate, goal.
To begin, project management is about managing work. Turner (1993), claims that work can be managed by decomposing total work into activities and tasks – that’s the basic concept. As the PMBOK Guide shows, these activities and tasks are the unit of analysis in the core processes of project management, such as scope management, time management, and cost management. Morris (1994) supports this description by outlining a project management approach based on four steps: first, what needs to be done; second, who is going to do what; third, when actions are to be performed; and fourth, how much is required to be spent in total, how much has been spent so far, and how much still has to be spent. Central to this sequence is the Work Breakdown Structure (WBS), which is a key deliverable of the project planning process, and is crucial to scope management and project control.
The PMBOK Guide provides us with a second concept in project management, by laying the groundwork for planning progression. Ten core processes, including scope planning, scope definition, activity definition, resource planning, activity sequencing, estimating, and project plan development, have been identified to guide the planning process. The outputs from these processes are the project plans, which form the inputs to the execution processes. The implication here is that if you effectively complete these steps, you’ll have the necessary inputs for successful execution, which will lead to a successful project.
These two primary concepts – the project as a series of tasks and activities, and the core planning methodologies as guiding principles – can help us understand a general theory of project management, which is thus: by undertaking a series of sequential, yet interrelated, tasks to define, plan, prepare and execute a project, you will be able to effectively achieve technical success and customer acceptance.
Although this theory sounds relatively simple, we often find that organizations have trouble putting the concepts into practice. Some of the key reasons are a combination of limited resources, lack of understanding, and the perception that there are no immediate financial benefits to justify the time spent on project management (i.e. it’s a cost-center). More specifically, young organizations view formal project management as overly bureaucratic, and as a hindrance to getting business done. Yet, these organizations are the ones who can most benefit from the application of theories that improve structure and accountability – which are direct results of the two key concepts discussed above.
Additionally, the theory of project management helps organizations gain efficiencies through standardization and streamlining. An organization that understands their own business, by analyzing and consistently following the core processes, can lower costs and enhance service levels. These core processes can be documented, allowing the organization to work on ways to improve the work-flow and customer experience at each stage. This feedback loop creates a virtuous cycle: documenting the steps to produce a deliverable will lead to more consistent application of the processes, which leads to more standardization, then to continuous improvement, and then back to documenting the improved steps.
Furthermore, by increasing consistency, deviation rates will decrease and you will find improvements in predictability – lending credence to the theory suggested above that by breaking a project down into tasks and following the core planning methodologies, we can create a plausible expectation of the outcome. This application of project theory also provides more accurate measures of project progress, which enhances our ability to meet project goals.
By ignoring the fundamentals of project management theory, especially during the planning stages, we find that customer requirements are poorly defined, and the process of clarifying and changing requirements leads to disruption. This is one of the key reasons that projects fail – incomplete or inaccurate scope definition. The constant disruptions cause actual progress to drift from the plan, which becomes too burdensome to regularly update (adding to the perception that project management is overly bureaucratic).
Without an updated plan to work from, informal management becomes prevalent. This causes work to be rushed, which in turn causes tasks to be commenced without all inputs or prerequisites, leading to low efficiency, task interruption, and increased variability (degrading our ability to predict an outcome – hence the importance of the theory). Likewise, controlling by means of a performance baseline that is no longer based on actual status becomes ineffective, or simply counterproductive, and results in the customer needs not being met. When we fail to meet customer needs, it’s impossible for us to achieve project success.
Subscribe to:
Posts (Atom)