Stakeholder

Cost performance is a symptom of other management functions. It is impossible to ‘manage costs’. The only way to change cost outcomes is to change the other processes that incur costs.

The three key areas of business operations and project management that incur costs and where a change in the process will cause a change in costs are:

1. Changing the procurement / purchasing / supply chain processes that acquire the required inputs to the process being managed.
2. Changing the way the work that transforms inputs to outputs is undertaken through enhanced management and leadership including skilling, motivating and directing the people involved in the work and ensuring they have the correct resources and equipment to undertake the work.
3. Focusing on the quality of the outputs produces to ensure the ‘right scope’ has been delivered at the ‘correct quality’. Too low and there are cost consequences in rectification, too high and you may have spent money unnecessarily.

These three elements exist in a risk frame. Whilst risk management will not ‘control’ the future, it will allow opportunities to be identified and grasped and threats mitigated and avoided by changing the way the work is undertaken and as a consequence optimise cost outcomes.

The two key facets that permeate all of the above are stakeholder management and time management.

• Stakeholder management both within the team and externally, (including effective communication) is central to achieving a successful outcome at the best price. Stakeholders are in the supply chain, include the project team and contractors and can have a major impact on the risk profile of the work. For more posts on stakeholder management see: http://www.stakeholder-management.com/blog/?cat=5
• Time management focuses on ensuring the right people are in the right place at the right time, with the right resources and equipment to do the work in the optimum sequence. For more posts on time management see: http://mosaicprojects.wordpress.com/category/project-controls/scheduling-project-controls/

Both of the above need regular reviews and adjustment within the overall frame of the emerging risk profile.

Where ‘cost management’ adds value is via techniques such as Earned Value (EV). Applying EV effectively allows the symptoms of a deviation from the expected performance to be highlighted through Cost Variances and other reports.

As with medicine and diseases, it is capability to recognise and correctly interpret symptoms that allows diagnosis that leads to the effective treatment of the under-laying problem. In project and business management space, this should translate to the requirement for managers not only to report a cost variance, but also to identify the cause of the variance and to recommend and/or implement corrective actions.

Whilst it is impossible to directly manage or control costs; timely and accurate information on cost performance can be a valuable diagnostic tool to remedy the real issues. What’s needed is for senor managers to stop focusing on ‘cost’ and start asking deeper questions about performance and risk.  I know many readers of this blog will say this already happens in their organisations, but I also know that far too many other managers focus on the symptom of cost performance rather than the under-laying problem to the detriment of their businesses.

Trust is a key element in the effective management of project teams and contracts. Trust speeds everything up and lowers costs but you have to continuously demonstrate you are completely trustworthy or people will quickly lose confidence in you. As the level of trust goes down, the speed of doing business goes down and costs go up. When levels of trust are low, or distrust exists, relationships and communications are ineffective and everything has to be proved or validated.

Balancing the cost of validation, checking and supporting legal documentation, the requirements of no trust, against the speed and cost effectiveness of trusting the information and actions of others is an interesting dilemma. How much is enough to pay for the lack of trust? Where are the pragmatic limits??

Temporary organisations such as project teams (particularly virtual teams), where people are brought together to complete a given task that requires a high degree of collaboration, within tight timescales and with a high cost of failure don’t have time to allow trust to develop naturally. They have to work out their differences on the fly and blindly trust one another to do their jobs. This is ‘swift trust’ and can be a powerful force but it is fragile and easily broken.

In other places a reputation for integrity and trustworthiness can be established and may pay dividends.

We are working on a White Paper looking at the role of trust within projects. Any thoughts of comments will be welcome. Previous White papers can be downloaded from http://www.mosaicprojects.com.au/WhitePapers.html

I deliver a significant number of training sessions each year through Stakeholder Management and Mosaic Project Services; including both face-to-face classroom courses and using our Mentored Email™ distance learning methodology.

One of the interesting observations is how the rate of information absorption (ie, learning) varies from person to person. The rate of learning does not seem to be correlated to a person’s IQ, industry or role in the workforce. If anything, people who absorb the learning more slowly seem to retain the information longer.

It would appear the ability to learn is a skill that is exercised naturally by younger people, but as one grows older this natural ability seems to fade with only some adults maintaining their innate capability to learn, frequently linked to active practice via university courses, etc. When presented with a large volume of new information (eg, a PMP course) the rest of us need to learn how to learn!

Some of the easier ways to absorb, make sense of, and retain information include:

Using analogies and metaphors
You can learn abstract processes by creating metaphors for more common events. So whenever you learn a fact, ask yourself what the idea is similar to in the tangible world; eg, a data store in a software program may be a cupboard with different things on each shelf.

Build mental pictures
If you break apart a complex mathematical formula into components, you can try to imagine what it would like as a graph or how each component influences each other in a railway switchyard.

Build on the basics
Do a bit of extra research on your most difficult topics focusing on their foundations. You might not understand the more complex theories perfectly, but it makes understanding your testable material much easier.

Become the teacher
The act of explanation creates connections. Ask yourself how would you explain what you’re learning to someone else? Teaching forces you to simplify and break down complex ideas and then re-connect them to build the overall picture.

Stop writing transcripts
Try to free yourself from rigid note taking (the course handouts fulfil this need), instead write down ideas in branches and connections. Add your own thoughts, diagrams and arrows linking ideas so you have a web of information. ‘Mind mapping’ tools are great for this but pencil and paper work just as well.

Draw Diagrams
Most people think in pictures and maps. Research suggests drawing will increase your concentration and help develop the connections between ideas. A picture may not be worth a thousand words, but it can often illuminate the connections that lead to a greater understanding.

There are many more sophisticated memory techniques available in a range of books on the subject but certainly in our areas of teaching, the ability to link ideas and understand the flow of both ideas and information seem to be the key to real understanding.

This opens up a second strand of thought – making the best use of a training course. Some simple tips that will help you to get the most from your training course include.

Before the training course

• Have a clear picture of what you hope to get from the training course expressed in terms of the benefits to you: a pay rise and promotion is more motivating than a PMP credential.
• Do any pre-course reading and make a note of any questions to bring along and ask the trainer. You won’t pay extra if you make the trainer work hard……

At the training course

• Arrive prepared
• Be open to learning new concepts, even if these challenge your previous understanding
• Don’t be afraid to ask the trainer to clarify points; remember that if you don’t understand something, it is likely that you are not the only one
• Share experiences when they are relevant and learn from others in the group, they are likely to be from different industries and have different experiences; take advantage of the fact that you’re surrounded by people with diverse work backgrounds.
• Dedicate time each evening to completing your homework activities, or reviewing the work covered during the day (our training courses cover a great deal of content in a condensed fashion – reviewing the material each day helps to cement the ideas in your mind).

After the training course

• Use the resources provided during the training course to help you integrate the concepts into your every day work life (the first 24 hrs after the course are a critical period for reinforcing learning by practice).
• Make the effort to change if you have discovered better ways of approaching your work, but remember you will need to explain the benefits of the change to people who did not attend your training sessions.
• Recommend the training to any colleagues that you believe will benefit from it

Learning new things should be an enjoyable process at all stages of life and career, and is becoming increasingly important to stay competitive in a rapidly changing world. Learning how to learn effectively is the first step along the journey.

There have been a series of posts on the Mosaicproject blog discussing the illusion of control and the limitations of statistical analysis for predicting or controlling the future. The key posts are:

• Seconds From Disaster
• The illusion of control: dancing with chance
• If it can go wrong……

Another dimension to the illusion of control, identified in a study by Nathanael Fast and Deborah Gruenfeld at Stanford Graduate School of Business, Niro Sivanathan at the London Business School and Adam Galinsky at the Kellogg School of Management at Northwestern University, show that power can literally ‘go to one’s head’, causing individuals who have power to think they have more personal control over outcomes than they, in fact, do. Across three experiments, using two different instantiations of power, the researchers found that power led to perceived control over outcomes that were either uncontrollable or unrelated to the power.

Galinksy reported, “In each experiment, whether the participant recalled power by an experience of holding power or it was manipulated by randomly assigning participants to Manager-Subordinate roles, it led to perceived control over outcomes that were beyond the reach of the individual. Furthermore, the notion of being able to control a ‘chance’ result led to unrealistic optimism and inflated self-esteem.”

The authors note that positive illusions can be adaptive, helping power holders make the seemingly impossible possible. But the relationship between power and illusory control might also contribute directly to losses in power, by causing leaders to make poor choices. They conclude that “the illusion of personal control might be one of the ways in which power often leads to its own demise.”

These results, reported in Psychological Science, a journal of the Association for Psychological Science, have implications for how power, once attained, is maintained or lost. From an organisational perspective, the ability of knowledgeable technical managers to effectively advise upwards is a powerful counterbalance to unreasonable hubris [for more on the report see: Power And The Illusion Of Control].

My next book, Advising Upwards: A Framework for Understanding and Engaging Senior Management Stakeholders seeks to define the skills and knowledge needed to make sure important information is passed up the chain to senior managers.

Whilst preparing my March column for PM Network (available 1st March), I was considering the difficulties caused by language in the process of communication. Albert Einstein summarized the problem nicely: ‘The major problem in communication is the illusion that it has occurred.’

Communication, is a two way process to build a common understanding. But the process of communication is not helped by words. There are words spelt the same with totally different meanings:

• The bandage was wound around the wound.
• The farm was used to produce produce.
• The dump was so full that it had to refuse more refuse.

And words that are spelt differently but sound the same:

• The soldier decided to desert his dessert in the desert.

These are just a few examples, the meaning of some words also changes by national, regional and industry usage as well as the migration of slang into acceptable usage. The example I used in my column is Since there is no time like the present, he thought it was time to present the present. What’s really interesting though is most people with a reasonable command of English within the context of the whole sentence would have little difficulty in distinguishing between:
- present = the current time
- present = bestow or give
- present = gift.

Then bring in punctuation to change the meaning of words:

• Eats shoots and leaves.
• Eats, shoots and leaves.

The Australian version of the ‘eats shoots and leaves’ joke is:

A wombat walks into a café. He orders a sandwich, eats it, then draws a gun and fires it into the ceiling.
‘Why?’ asks the confused waiter, as the wombat makes towards the exit.
The wombat produces a badly punctuated wildlife manual and tosses it over his shoulder. ‘I’m a wombat’, he says, at the door. ‘Look it up.’
The waiter turns to the relevant entry in the manual and, sure enough, finds an explanation.
‘Wombat: Mid sized Australian marsupial. Eats, shoots and leaves.’

(The Australian version of this joke is actually eats roots and leaves – wombats live in burrows – but I won’t go there).

In face to face conversations, recognising misunderstandings that can lead to a breakdown in communication is fairly easy; up to 90% of the communication is through body language and vocal tones. Even with telephone calls, the tone of voice tells you a lot about the other person feelings. Traditional writing with proper sentence construction and punctuation falls a long way short of verbal communication but is also a well understood structure for conveying information, if not understanding.

However, the arrival of emails, SMS and twitter has transformed the communication landscape. In a virtual team probably more than 90% of the communication is based on the words in emails and texts. These communication media do not follow the traditional rules.

People in a well established group operating virtually may be able develop language protocols that provide effective communication but to outsiders this ‘new language’ can be almost impenetrable. Cn u undRst& dis? (translated at Lingo2word = can you understand this?). Throw in some good old industry jargon and from the perspective of the old rules, it’s surprising any one actually communicates. But they do, or at least appear to!

One study has suggested good virtual teams outperform good co-located teams but poorly functioning virtual teams are far worse than poorly function co-located teams. I need to follow up on this but my first impressions are the breakdown in communication implied in the study has far more impact in the virtual arena.

In this new age of interconnectiveness the rules of effective communication are different and rapidly evolving and the degree of acceptance of these ‘new rules’ is likely to be in part age based. Most people in their 50s and 60s really need to see someone they are dealing with at least once or twice to build rapport and open effective communications; whereas younger people seem totally comfortable building rapport by email and text.

Another aspect is the global nature of ‘web2’. Old communication protocols varied from society to society based on each society’s concepts of formality, social structure and power. Outsiders who needed to communicate effectively in a different culture learned the appropriate cultural norms. How relevant these traditional forms are to people under 30 who can communicate with anyone, anywhere using SMS and email, not to mention the social networking sites such as twitter has not been determined. More things to look at…..

What does this mean for a manager developing a communication plan today? The short answer is I don’t know. Effective communication is still critically important in most aspects of business but I would suggest relying on any set of protocols that worked in the past without a careful assessment of their current effectiveness is likely to be counterproductive.

Some of these questions will be addressed in my new book, Advising Upwards: A Framework for Understanding and Engaging Senior Management Stakeholders (publication 2011), many of the others are starting to be worked into our communication workshops but there’s a long way to go both academically and practically to really come to grips with the new communication landscape.

More later.

Over the years there has been a lot of discussion on the value of credentials such as PMP; frequently triggered by the failure of a ‘qualified’ person to perform in the workplace.

There are essentially two ways to assess a person from a credentialing point of view. Testing what they know or assessing what they do. Competency based assessments (what they do) tend to assume knowledge based on performance. You cannot perform a complex task such as managing a project without knowledge. However, competency based assessments have two disadvantages:

• Competency is demonstrated in a specific a time and location. There is no guarantee the competent person will perform as well in a different setting with different people, cultures and relationships.
• The assessment of interpersonal competencies tends to be subjective and project management is very much focused on directing and leading people. Assessing behavioral competencies goes some way towards solving this dilemma but the assessment is still subjective.

Knowledge based assessments are empirical. The person had sufficient knowledge to pass a defined test at a defined point in time. However, the passing of a knowledge based assessment such as PMP or for that matter an MBA only shows the person has a predefined level of knowledge. The disadvantages of knowledge based assessments are:

• There is no indication the person can apply the knowledge effectively in the workplace.
• The knowledge tested in any exam is only a portion of the overall domain knowledge.

Given the problems with either assessment process, assessing the value of a qualification is complex and is differs depending on who is making the value judgment, an employer or an individual.

The value of a qualification to an individual can be measured in at least three areas:

• The advantage it offers in the job market;
• The recognition governments and other licensing authorities give to credential holders and
• Its recognition by other entities offering higher qualifications through credits or advanced standing.

The value of a qualification to an employer is in part a function of the credentials reputation and in part, what this tells the employer about the credential holder. Whilst the PMP is a uniquely valuable industry based credential, no single assessment is ever going to provide a guarantee of a person’s suitability for employment in a particular organisation. Being a PMP provides one point of assessment; the PMP holder had the knowledge needed to pass a difficult, quality controlled exam. However, employers also need to look to other aspects of a person’s overall capabilities as well.

My feeling is the lack of undergraduate/baccalaureate degree courses in project management has given PMI’s PMP and other similar project management certifications a solid value in the job market. This is quite different to many other credentials issued by professional bodies. The UK based Chartered Institute of Building’s MCIOB credential requires a degree, several years experience, an examination and a professional interview; in most respects at least equal in its rigor to PMI’s PMP requirements. Both credentials should be assessed as being at a higher level than a degree but at least in the Asia Pacific region, the construction industry and governments focus on building managers holding a University construction degree, not MCIOB.

Similarly, higher degree courses in project management routinely offer some level of advanced standing for PMP holders. I am unaware of any advanced degree in construction or the built environment that offers similar advanced standing for MCIOB, although some other professional credentials do achieve a level of advanced standing in some higher degree courses.

This unusually valuable status of PMP as been built up over many years; however, the value also creates a number of challenges:

• Employers may have expectations of PMP holders not supported by the credential.
• But, credential holders need to live up to the reasonable expectations of their employers, and current credential holders also have the challenge of maintaining the worth of the credential for future generations of PMs.
• PMI needs to ensure the examination process remains both credible and effective.
• Training organizations such as ours need to ensure their PMP courses are relevant and interesting.

We have chosen to focus our training on the PMI range of credentials because they are a defined package, we know if we have done a good job as soon as a trainee passes their exam. The subjectivity of competence assessments lacks the clarity of pass/fail. However, look 5 to 10 years into the future and I expect the credentialing process will have change substantially to blend aspects of workplace assessment (competency) with the formal testing of knowledge. The Program Management Professional (PgMP) credential is a start along this route, my prediction is most other credentials will follow.

The CIOB is finalising the publication of ‘The Guide to Good Practice in the Effective Management of Time in Complex Construction Projects’ with a public consultation period planned before Christmas leading to publication in 2010.

The primary purpose of this Guide is to set down the standards of project scheduling necessary to facilitate the effective and competent management of time in construction projects by defining the standard by which project schedules will be prepared, quality controlled, updated, reviewed and revised in practice.

Before embarking on the guide, the CIOB conducted a survey between December 2007 and January 2008 of the state of time management in a range of UK construction projects. The outcome of the survey was surprising. On simple construction projects, the range of outcomes (late, on time, early) were more or less the same regardless of the use or non-use of effective time management processes.

However, as the projects became more complicated, the difference between projects with an effective time management system and those without became significantly more noticeable. Projects with a well defined time management system were far more successful than those without!

The definition of simple and complicated derived from this study is:

• Simple Projects comprise those in which construction has the following characteristics:
  • design work is completed before construction starts;
  • single building or repetition of identical buildings;
  • less than 5 stories high;
  • without below-ground accommodation;
  • carried out to a single completion date;
  • without phased possessions or access;
  • with services not exceeding single voltage power, lighting, telephone, hot and cold water and heating;
  • a construction period of less than 9 months;
  • with a single contractor; and
  • with less than 10 sub-contracts.
• Complex Projects comprise those in which construction comprises, one or more of the following characteristics:
  • design work is to be completed during construction
  • more than one building
  • more than 5 stories high
  • with below-ground accommodation
  • with multiple key dates and/or sectional completion dates
  • with multiple possessions or access dates
  • with short possessions
  • with services exceeding single voltage power, lighting, telephone, hot and cold water and heating.
  • accompanied by work of civil engineering character
  • a construction period greater than 12 months
  • with multiple contractors
  • with more than 20 sub-contracts

This opens the question why? I would suggest the likely answer, transferable to any project and any industry, is in two parts; both related to stakeholders and communication.

The initial benefit of the process of developing the schedule on a complicated project is the insights the act of creating the schedule gives to the project management team. It is impossible to effectively communicate to the project team and other stakeholders what has to be done when if the project management group don’t have a very clear idea themselves.

‘Simple projects’ are small enough and routine enough to be mapped out in an experienced managers mind. The person intuitively knows what needs to be done. As the project becomes more complex the analysis and serial decision making inherent in the schedule development process creates insights, new information and allows the testing hypothesis until an acceptable solution is devised. At the end of the planning process, a way forward has been determined, optimised and agreed.

The greater benefit though is likely to be in the area of coordination and communication during the work of the project. No schedule is ever perfectly correct. But having an agreed schedule that everyone works towards achieving minimises coordination issues and as elements of the work occur out of alignment with the schedule, the schedule and the variance information provide the foundation for proactive discussion and decision making.

A final intangible benefit of having a schedule has been identified in new research by Jon Whitty. It would appear that simply having a schedule is important for the credibility of the project manager. The project manager’s managers expect the PM to have a schedule and consequently give more credibility to communications from the PM if the schedule is present.

The challenge facing both PMs and their managers as a consequence of these findings is to determine for their industry the difference between simple projects where minimal systems are needed and complicated project where not having a reasonably sophisticated system to help manage time, and other elements of the project, is a distinct liability.

It would seem size does matter! And the old saying ‘if you fail to plan, you plan to fail’ really only applies to the larger more complicated projects.

Our sister company, Mosaic Project Services has developed a range of papers on the art and science of planning and scheduling available from Mosaic’s Planning and Scheduling Home Page.