PMBOK® Guide Sixth Edition: What Would You Like to See Added?

Sometime in 2016, the next edition of the PMBOK® Guide should be published by the Project Management Institute. We could wait until too late and then complain about how the hard-working folks who author the “bible” haven’t seen fit to include our pet terms, techniques, metrics and ideas. Or we could start now by developing a list of items that we feel it should include, and perhaps either someone will notice it or we can summarize it and email it to PMI for consideration.

Toward this goal, I am starting a “PMBOK® Guide Sixth Edition Wish List” thread in the Discussion FORUM attached to this blog. I hope that readers will weigh in with their own suggestions/nominations, as well as comment on the suggestions of others. And periodically I will compile a summary of them.

For starters, here are ten items that I personally think should be included in the next edition, listed in descending order of how valuable I feel the inclusion of each would be. I will follow each with a brief explanation or descriptive link and a five-scale rating, running from VL (for Very Likely) to L to M to U to VU (for Very Unlikely), of my estimate of the probability of each being included.

  1. Change in the definition of “project” to eliminate the weasel word ”endeavor” and replace it with “investment in work”. My preferred redefinition would be: “An investment in work to create a unique product, service or result.” (No need for “temporary” either, until someone can show me something that isn’t temporary!) [U, even though this would have great benefit for the project management profession by recognizing our important role in utilizing the resources and funds with which we are entrusted to maximize value and ROI.)
  2. Expand the section on “Business Value” that was introduced in the 5th edition and that currently occupies most of pages 15-16, as well as being mentioned in the Glossary. The current description starts: “Business value is a concept that is unique to each organization.” That is indisputable. But it is also such a crucial concept (the raison d’etre of every project and/or program!) that surely it needs to be expanded to far more than two pages. Deserving of exploration are:
  • What are the commonalities of business value across any and all organizations?
  • How should it be measured? (Value is usually measured in monetary units.)
  • What generates the business value? (Answer: the product scope, with occasional contribution from the project scope if just doing the work adds value {e.g., a more experienced workforce}.)
  • What project documentation/technique should be used to define the business value? (Answer: the value breakdown structure (VBS) – which should definitely be included, and I think will be!)
  • How should business value be used to manage the other aspects of the project? (Through optimizing it in integration with schedule and cost, and using it to justify additional resources where their cost is less than the value they add.)

[VL. Business value is an obvious concept that lots of people have been writing about for a while. Whether any of the information mentioned above is included in the expanded treatment of the topic is much more doubtful. But almost any expansion would be useful.]

  1. Change the EVM term from planned value (PV) to planned cost (PC). It is cost, as the original earned value terms (that are still used in US Department of Defense contracting) BCWS, BCWP and ACWP emphasized: notice the “C” as the second letter in each of those. Yes, using two letters instead of four for each term made the metrics more accessible, and PMI has done a great job in spreading the use of the technique. However, the word “value” instead of “cost” in PV and (and in EV!) confuses people over the concept of business value. (For a great illustration of this, read Mike Hannon’s review of my book Managing Projects as Investment: Earned Value to Business Value.) [U. Okay, maybe I’m too optimistic and it should be VU. But if PMI wants (as it should!) to expand the concept of business value, it has to start clearly distinguishing between cost and value.]
  2. Include critical path drag as a scheduling metric. Wikipedia definition here. Every item on the critical path of a project or program has drag (unless two parallel paths are both critical, in which case neither has either drag or float but both, in combination, have drag compared to the next longest path). Why does the PMBOK® Guide include the non-critical float (slack) metrics but not the always-critical drag that costs the project time and money? Knowledgeable project managers are now computing drag “manually” – but drag analysis would be done so much more routinely if all the software did the calculation. That will happen someday – but much faster if the next PMBOK® Guide recognizes it. Besides, it’ll stimulate a lot of additional opportunity for PMP Exam questions! [L. Again, maybe I’m being overly optimistic — but it’s just hard to see how knowledgeable people could think that drag doesn’t belong in the Time Management section.]
  3. Stress the importance of a clear estimate of the value/cost of time as part of the charter or project business case or other initiation documentation. [U. It’s an obvious idea which would help tie PMBOK® Guide methods to the shutdown and turnaround discipline, where such estimates are standard and hugely important. I think it will happen eventually, but probably not in the 6th Edition]
  4. Include drag cost as either a Time Management or Integration Management metric, or both. Wikipedia definition here. On more than 98% of projects (by my estimation) extra duration (i.e., time on the critical path) reduces the expected value-over-cost (expected project profit (EPP?) of a project. And on those few exceptions, it’s important to know that they are exceptions! If critical path drag is included, it would be hard to understand a rationale for not mentioning drag cost. [M. Less likely to be included than plain naked drag, but still a good chance. If it is included, it would increase the chances for inclusion of #5, stressing the importance of a clear estimate of the value/cost of time.  But #5, recognition and quantification of the value/cost of time, is more important than just the act of tying it to an activity’s drag.]
  5. Mention and discuss the DIPP formula (DIPP = {$EMV of Scope ± $Acceleration or $Delay} ÷ Cost ETC} for planning, optimization and tracking. [VU. A rephrasing of the definition of “project” to include the word “investment” (see #1) would obviously make this more likely. But the “enabler” (see below) has to be recognition of projects as investments. Maybe this important metric will be included in the 7th or 8th]
  6. Recognize and discuss the multiplier effect on the value of “enabler” projects within a program, as well as the multiplier effect on an enabler’s acceleration premium and/or delay cost. The failure to recognize the special nature of enabler projects and to designate them as such leads to many bad decisions in terms of resource targeting. [U. Again, it’s an obvious and important concept. Some of the PMBOK® Guide authors are very smart people, so I hold out some hope.]
  7. Discuss/mention the doubled resource estimated duration (the DRED) as a technique for estimating the resource elasticity of an activity’s duration in response to additional resources. The DRED is an estimate of what an activity’s duration would become (shorter, longer or stay the same) if its assigned resources were doubled. [VU. Too bad, it’s a useful little tool for identifying where additional budget would help the most.]
  8. Discuss/explore the cost of leveling with unresolved bottlenecks (the CLUB). We know that resource insufficiencies cause delays. If we start measuring the value/cost of time, we will be able to quantify that cost and attach it to the specific bottleneck causing the delay. This metric is extremely valuable on a single project basis, and even more when compiled for an entire resource type or functional department across all the projects it supports – in other words, this is a toll that can move us toward right-sized staffing levels. [VU. But the CLUB is SO valuable to project and functional managers! I’m allowed to dream, ain’t I?]

Well, here are ten to start the ball rolling. C’mon, now, you must have some ideas too, don’t you? CCPM folks? Agile expansion suggestions? Add them to the list.

Fraternally in project management,

Steve the Bajan

The Benefits of Recognizing Projects as Investments: “And yet, it moves!”

One of the great afflictions of mankind throughout history has been the stubborn refusal of certain figures who see themselves as ”authorities” to alter their views in light of new ideas and evidence.

In the 17th and18th centuries, combustion was explained as the escape of a substance called phlogiston from a material. This theory was staunchly defended even after it was shown that magnesium gained mass when it burned. Finally, Antoine-Laurent Lavoisier proved conclusively that combustion was the combining of a material with oxygen. This new explanation led to giant steps forward in both physics and chemistry.

Galileo

Some of the most stubborn ideas are those that come with the imprimatur of sacred scripture. Thus the heliocentrism ideas of Copernicus, Kepler and Galileo were banned by the Vatican as conflicting with the Bible and the teachings of the Council of Trent. Galileo was threatened with burning as a heretic, placed under house arrest, and left only able to mutter about our planet: “Eppur si muove.”

Yesterday I had a discussion on a LinkedIn group in which I tried to explain that, in fact, all projects are investments and that recognizing them as such could have great benefit both for the development of better management techniques and metrics and for the greater esteem for our discipline. Alas, I ran into an individual who refused to accept any definitions or techniques beyond the pages of the Fifth Edition of the PMBOK® Guide.

Make no mistake – I regard the Guide as a very valuable book. But both I and PMI also regard it as a guide, and not as the entire body of knowledge of project management! It is also an evolving document, or there would be no need for new editions.

There are techniques and tools and metrics and, yes, definitions that are being used within our discipline that have not yet made it into the PMBOK® Guide. Undoubtedly many will some year. Critical path drag is an example – every project, however scheduled, has a longest path of activities and other delaying factors, and the amount that each item on that path delays completion is its drag. And drag is always there, and has been since the pharaohs’ projects, whether we and our software compute it or not! And this metric is enormously helpful whenever we are seeking places to compress our schedule! (Many clients have employed me over the years to use this technique to recover schedule.)

So what about the definition of a project that I use in my books?

“A project is an investment in work to create a product, service or result.”

First, is there anyone (apart from the gentleman from the LinkedIn group) who would argue that projects are not investments?

  • Investment: “1 The action or process of investing money for profit or material result;.. 1.2 An act of devoting time, effort, or energy to a particular undertaking with the expectation of a worthwhile result.”

http://www.oxforddictionaries.com/us/definition/american_english/investment

I believe we would all agree that every project is undertaken only if its probability-weighted value is expected to be greater than the cost (i.e., the invested amount). If we need a definition for value, the very first definition from the same source seems applicable:

Value: “1 The regard that something is held to deserve; the importance, worth, or usefulness of something”

http://www.oxforddictionaries.com/us/definition/american_english/value

A project’s value may be:

  • Revenues from a new product or service;
  • Future cost savings;
  • The opportunity to keep a plant open instead of being forced by the government to close it;
  • Avoiding fines;
  • Garnering votes;
  • Prosecuting criminals;
  • Saving lives; or
  • Any other of dozens of efforts intended to create a valuable result.

So every project is definitely an investment. But what might be the benefits of staring to recognize them as such?

  1. Project management would start to focus on the quantified aspects of those things that impact the value of the investment: the Golden Triangle of the integrated value/cost of scope, time and resource usage.
  2. Project managers would work harder to align the scope of the project with the benefits wanted by the sponsor/customer through the collaborative development and implementation of a value breakdown structure (VBS) and other techniques. (The failure to actually deliver the benefits for which a project is undertaken is a big issue in many circles, and this would help to solve the problem.)
  3. The value/cost of time on a project, which is currently almost always left as an unquantified externality and therefore rarely managed in terms of its actual impact on the investment, would suddenly be recognized for its importance. Many scheduling techniques that experienced PMs have mastered, like critical path analysis and resource leveling, would therefore suddenly be fully appreciated.
  4. Both drag cost and the true cost of work could be easily computed, meaning that activities on the critical path would be evaluated not only on the basis of their resource costs, but also their drag costs in terms of how much their drags are reducing the value of the investment. (True cost = resource costs plus drag cost.)
  5. Decisions across the Golden Triangle would be quantified in terms of investment value. Should we employ an additional resource costing $10,000 on a critical path activity? Well, will it reduce the drag cost by more than $10,000? Or would we be better off jettisoning that activity because its true cost will be greater than its value-added?
  6. We will be able to track each project during performance not just on the basis of earned value cost and schedule metrics, but on the basis of investment metrics: the expected project profit (EPP) of the project as tracked through the DIPP and the DIPP Progress Index.

All of these are just a sample of the benefits that would accrue if we start dealing with projects as investments. I believe that practitioners would rapidly develop new metrics and techniques to do an even better job of measuring and ensuring greater project investment value.

But perhaps the most important benefit would be for our profession: the value of project managers and project management techniques and contributions would become clearly measurable in value/cost terms. Instead of being looked upon as “overhead on cost centers” project managers would become valuable contributors to the organization’s bottom line.

Surely this would only help PMI to market its ideas and techniques to senior managers who know little about projects, but who care a great deal about investments!

Fraternally in project management,

Steve the Bajan