Ten Amendments to the Current Practice of Project Management

I believe that project management is, in many ways, failing in what should be its purpose: to provide a valuable return to the investor(s) who provide the resources/money for the project effort and who hope to reap the benefits. But I don’t happen to feel that we need a whole new methodology. The basic tools in our toolbox (WBS, critical path analysis, resource leveling, activity-based resource assignments, earned value tracking) are wonderful techniques, and are being efficiently applied by many project managers.But in many other cases, projects are generating much less value than they should.

I do believe that some of the tools, as valuable as they are, need what I’d call “amendments”: sharpening, enhancing or re-shaping for wider utilization – such as the routine incorporation of the drag metric as a standard part of critical path analysis. But the major flaws, I believe, are not so much in the tools as in how they are being misunderstood and misapplied.

I‘ve been thinking for some time about preparing a list of “Amendments to Current Project Management Methods”. Below is a pretty barebones outline, without getting into a huge amount of explanation (because I just wrote a 255-page book that pretty much provides that!), which lays out some of the techniques and modifications that I feel would significantly improve the way we do projects.

This list will probably evolve over the months ahead (and I’m certainly willing to entertain other suggestions), but the Ten Amendments below ain’t bad for a start:

  1. Get agreement from everyone (team members to senior management and customers) that projects are investments.
  2. Get them to agree that investments should be undertaken for the value they are expected to generate.
  3. Get them to understand that the value/benefit they expect from the project will be based on its scope (mostly product scope) and that therefore the specifics of the product scope should designed with those benefits in mind. [This should lead to the creation of a value breakdown structure (VBS)].
  4. Get them to agree that the results of all investments are not guaranteed, but rather involve estimates, uncertainty and risk. Explain that “deadlines” and fixed cost caps (“budgets”) are arbitrary strictures that are far more likely to cause negative behaviors (e.g., Parkinson’s Law, or secretively cutting quality to meet deadline/budget, or simply taking unwarranted risks when pushed for time/cost adherence) than to have magically made an accurate prediction of what the project would really require. Suggest instead getting the organization used to the terms “target date” and “target cost”.
  5. Get everyone to agree that, the vast majority of the time, project delivery date has a big impact, positive or negative, on the expected value of that scope. This should lead NOT to a deadline, but to an estimate of the value/cost of each unit of time earlier OR later than the target date. And this quantified estimate should be a part of the initiation documentation of every project! And any contract for a project should include clauses establishing incentives (positive and negative) for schedule performance, aligning as much as possible the potential benefits to customer and contractor.
  6. Show everyone how, with the expected value of scope, the value/cost of time, and resource usage all quantified in monetary terms, the three sides of the “Iron Triangle” are now all integrated and monetized so that it has become the Golden Triangle. Any variance in any side will have a quantified impact on the integrated value of the project as measured by expected project profit (EPP) and the DIPP. Show how this now provides a single metric against which project performance can be tracked, with better performance being measured not just in schedule or cost terms, but in what should matter to everyone and particularly to those funding the project: investment value, or ROI, or expected project profit!
  7. Ensure that everyone understands that every project, no matter how it is scheduled, will be precisely as long as its longest path of activities, logical constraints, resource constraints, delays, rework, sprints, and stumbles! And therefore no matter how it has been scheduled, critical path analysis that includes drag, drag cost, and true cost (TC = drag cost plus resource costs) computation must be performed, seeking opportunities to reduce drag costs and thus accelerating the schedule where greater project profit can be generated. Everyone should also understand that the value/cost of time on enabler projects (i.e., those that enable other projects to generate value) go through a multiplier effect, and thus identify such enabler projects and their elevated value/cost of time.
  8. Ensure that both time-limited and resource-limited resource leveling is performed on each project, and on all projects (and especially prospective new projects!), within the portfolio of a multiproject organization. The data regarding the cost of delays caused by insufficient availability of each specific type of resource should be analyzed on an organizational basis at least quarterly, with Pareto charts assembled to identify and quantify the project delay costs to the organization of resource insufficiencies on the critical paths, and to improve efficient levels of staffing for each resource type and functional department.
  9. Ensure that everyone understands that earned value is not about project value, but about project cost, i.e., resource usage! The term has been the source of persistent confusion. Even to a contractor, project value almost always includes value drivers that are not part of the price/budget. On a medium sized project in an organization without robust financial tools, earned value planning and tracking can be performed adequately on the basis of planned and actual labor hours. (Indeed, CPI-Labor should be an important metric in any EVM system.) Everyone also should know that earned value is inadequate for schedule tracking, at least in the way it is customarily applied, and can lead to incentives for out-of-sequence and noncritical work. Schedule must be tracked through critical path tracking and/or by developing a separate earned value baseline for schedule tracking that takes into account the critical path by being scheduled on the late dates.
  10. Ensure that project postmortems are performed on all significant projects (not just on those that went badly!) and that the as-built critical path (ABCP) is presented as one of the key artifacts for lessons learned, particularly in identifying causes of project delay with their quantified costs. And that every postmortem sets a future date on which the data on the mature final product can be analyzed with greater knowledge and objectivity so that current assessments of quality, durability, and value (including revenues/savings) can be updated.

Okay, so at least that’s a start. And I think implementing these would make a huge difference. So anyone have additional suggestions?

Fraternally in project management,

Steve the Bajan

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