4th Sigma: Decompose Now And Projects Won’t Go Bad Later!

Posted on January 8, 2012 by Chris Niccolls

Long time readers of this Blog are familiar with my “4th Sigma” series on building simpler, easy to implement process improvement. I’ve argued against training for (and using) all of the tools that Six Sigma offers. It’s not that the tools don’t work, they do! Many managers are put off by the sheer abundance and complexity of these tools. Most corporate projects can do just fine with a much smaller set of simpler and “pre-fab” tools. In today’s blog we’re going to discuss a concept that runs through all project management, project improvement and software development methodologies. It’s called… Decomposition… the process of breaking down a big task into several smaller, easier to understand tasks or processes. OK, now let’s dive in!

Does everybody remember the 70’s TV series, the “Odd Couple”? In a memorable episode, one of the main characters (Felix) is in court and pulls out a blackboard to write out “ASSUME”. He then separates the letters “ASS” “U” and “ME”, saying, “when you assume, you make an ass out of you and me!” The lesson being that assumptions are often wrong. What is an assumption? An assumption is our  attempt to figure out what’s going when it looks like something we’ve seen before or when we try to guess about the information that’s missing. Because different people use the same words for entirely different things, a group can walk away after a conversation believing they made entirely different agreements.  Groups of people (such as project teams) can be fooled into believing they have an agreement (or an understanding of coming events) because key words in an agreement are unclear. An example will help explain this point.

Let’s say that you are working on a project, and you have a task on your project schedule… “obtain approval for software”.  Pretty simple, right? You just need some guy to say, “Yes.” What should that take… a week? That’s where the assumptions begin!  For this example, let’s assume that your firm is buying an accounting application from a commercial third-party firm. Further, this software has features that link into email and Microsoft Excel.  Pretty simple? Let’s dig deeper:

  • Additional Licenses: You talk to IT and find that the simplest process is to add (or upgrade) licenses for existing products. IT has a list of official software and the approvers. If a user needs a license, the head of the user’s group needs to send the approver a request, and the software will be installed within 72 hours. However, you have a new product so this process doesn’t apply.
  • Server License: Server licenses are handled by a different group, with a different list of approvers. There is also a form that needs to be filled out and approved by the IT approver and by the head of the requesting department. Your project requires a cloud-based product. That’s a bit of a problem. Your firm hasn’t done many Cloud projects yet, so there is confusion over who approves what. Luckily, you spoke with IT at the start of the project and worked this out. It now has an assigned an approver for Cloud requests. You’ve been told that it will take a week to approve a new request.
  • Multiple Approvals: IT has a formal software approval process, after all big part of their responsibilities center around software. Business unit have infrequent software projects and a less formal process for approval. When a key approver in the business unit is away, requests may need to wait. You knew that the head of the department planned an extended overseas business trip, followed by a vacation, so you’ve scheduled time with the approver before he leaves the office.
  • Large Approval: While IT has a formal approval process, it can still be affected by other corporate processes. For example, the accounting department has set a $50,000  limit for item for each IT approver. If an item is more, it goes to a committee to approval. Your software originally cost $38,500. A last-minute change raised the cost to $41,250. You are well below the $50,000 cut-off so you don’t need to worry, right?
  • Unofficial Processes: Start worrying! IT believes that accounting is about to lower approval levels to $40,000; it believes that accounting will require re-approval for any already approved software costing more than $40,000. Your approver didn’t mention this earlier, because your software was under $40,000. Now it must go through the approval committee. The committee meets every other week, but always approves or rejects all software that was scheduled for review. To be scheduled for review, you need to submit your request at least 3 business days before the meeting. You now know that it will take 5 to 12 days (2 days for the business department, and from 3 to 10 days to get into the meeting) to get approval.

OK, the worst case of 12 days isn’t that bad. You’ve checked everything you are responsible for. But when you look at the whole project list, you see that some other tasks are a bit vague and haven’t been sufficiently decomposed. You ask a few questions to clarity these tasks. Here’s what you find:

  • PC Software: Because you are buying a Cloud based application, not a lot of time was spent looking at  users’ PCs. Then you remember that email and Excel are somehow involved. Email is largely server-based, and everyone in the firm has the minimum version to use your application. Good! But you also find that your firm is running many different version of Microsoft Excel. A few users do not have the minimum version of Excel the Cloud application needs. Make sure that checking the version of Excel is on the project schedule.
  • Server Hardware: It’s a Cloud application, so you don’t need a server. But you check anyway, just in case it’s a “sort of Cloud” application that does need some sort of hardware on your side. Looks like you’re OK here.
  • PC Hardware: Because everyone has a PC, and the application is supposed to be Cloud based, no one checked the hardware on the PC. You ask IT for PC specifications which say, “A dual-processor computer is strongly preferred.” Hmmmm… 10 computers do not meet this requirement. Who decides if the “preference” for dual-processor is a requirement? Sounds like you need to send this back to IT for clarification.

As you can see, when tasks are not fully decomposed, what appears to be a one task can be two… or more. And entirely different sets of tasks can go by the same name. How do you ensure that you have correctly decomposed your tasks?

Owner: Is the task simple enough to assign accountability to a single individual? If the task clearly falls under two or more individuals, it is probably two or more tasks.

  1. Time: Is there enough information on the task to know how long it will take to perform?
  2. Cost: Can you assign a cost to the task? If not, is it because there is not enough information or are too many tasks?
  3. Single Process: Are you sure that this is one task and cannot be broken into two or more tasks? Is anyone on the project team still asking, “What is that task?”, or similar questions that cannot be answered?
  4. Numbered List: As you decompose tasks, assign each task a number. For example, your top level might be purchases = 4, training = 5, and hiring = 6. So, item 4.3.5 might mean: 4-purchase; 3-software; 5-accounting. Numbering tasks makes them easier to track, and easier to eliminate duplicates. Poorly decomposed tasks hide processes… that may duplicate other tasks on your schedule. Once these tasks are decomposed and arranged on a numbered list, if there are duplicates they are now placed closely together and are easy to visually spot… and eliminate.
  5. Written Process: For common approval processes that your PMO (or improvement groups) performs, write out a simple process description. A page or less would describe all the variations of software approval processes and perhaps a list of the key approvers. This would give you a common glossary of terms and a common understanding of the requirements of each approval. That’s much better than figuring it out on your own!

There we have it. A key tool, or perhaps mindset, is that every project needs to be decomposed into specific, unambiguous tasks. Decomposition reduces or eliminates assumptions and makes it easier to see if adjacent processes link up correctly, or are missing. Decomposition is a very simple process, but one that you need to apply consistently until you understand each and every task in your project. Never ASSUME that someone else on the team will eventually figure out how a task works.  And that’s my Niccolls worth for today!

Posted in 4th Sigma, Best Practices, Improvement, Continuous or Not, Project Management Office | Tagged , , , , , | 1 Comment

PMO Genius: 8 People Projects For 2012!

Posted on January 2, 2012 by Chris Niccolls

Will 2012 be the year of people projects? Over the past few years, changes in the economy have driven changes in business models. However, this has largely been a reactive change, without a clear plan for changing staffing in the firm. In the last few years we have seen waves of layoffs, outsourcing and “re-sizing” to support cost reduction goals, but not with a clear plan of how these changes are reflected in the firm’s ability to work. The corporate staff has been stretching to adjust to these changes, but when you continue to stretch year after year, eventually things can suddenly snap… and you suddenly see the results of many years of changes all at once. The U.S. economy went through one of these “stretch and snap” periods in the early 90s, and now the same forces seem to be lined up to create similar dramatic changes. How will this affect your PMO’s plans for 2012? Today’s blog will explore the big change in the 90s, see what that means for 2012, and how to tell if your organization is ready when things snap! Ready… here we go!

Before the 90s recession, saving and loan banks were deregulated and then had reserve requirements slashed. By the late 80s, thousands of S&Ls (largely located in Texas were regulation was the weakest) collapsed, draining capital from individuals, corporations and governments. In ’87 the stock market collapsed, providing a follow-up blow to trigger the recession in ‘90 and ‘91. Corporations, which had been investing in computers for decades, now had a big portion of the workforce using computers, making long distance outsourcing cost effective. The recession forced corporations to examine their operations and find cost savings. Across corporate America a trend was noticed, the primary functions of middle managers and sales managers (consolidation and reporting of information) was “hollowed out” by the new technology: email, accounting systems, procurement software, report generators, CRM’s, and proprietary databases. Higher-level managers could ask  computer systems directly for information, and B2B systems made sales managers far less effective in selling commodity items. Large numbers of highly paid staff with unclear value to the firm were finally let go. However, the process was chaotic and unplanned. Authors such as David Williams, have argued that the reactive method of laying off whole categories of mangers hurt many firms more than it helped.

Today, we’re looking at a very similar situation. Deregulation, followed by the collapse of financial institutions, followed by the collapse of the stock market… happening after decades of corporate investment in technology and outsourcing. This recession was deeper than the 90s, and today’s corporate investments are more diverse than in the past. Every possible market and industry has… and continues to be… changed: oil, financial markets, technology, the decline of Detroit based cars,  the rise Chinese and Indian economies, Brazil eclipsing the UK economy, and on and on. With diverse economic changes, and divers corporate investments in process improvement, the impact on corporate processes has been… diverse. To put that another way, there are MANY opportunities for cost savings and for improvements that are scattered across your organization. These pockets of opportunity are not always obvious, and at a glance, they are not connected. Together these are huge opportunities, but they are buried because of the way corporations report data. In order to take advantage of these opportunities, someone needs to unearth these opportunities. Who? Why that would be You, my fellow PMO Geniuses!

PMO offices did not exist in corporations in the 90s. Today… PMOs, process improvement groups, and similar organizations to track investments and identify opportunities are being rolled out like never before. PMOs must look beyond simple project managements, and take responsibility for assembling individual operational snapshots from projects into a “panorama” of the firm. In order to do this, the PMO needs to be sure that the project portfolio reflects reality. Look at your 2012 portfolio and see if the projects reflect the changing employee profile of your firm. If not, you need to talk to project sponsors and department heads to see why projects are missing. Here are the projects that should be in your portfolio:

  1. HIRING: HR department not only need to hire ever-changing  types of talent, they need to develop new ways to find talent. Facebook, LinkedIn and social-networking  sites have surpassed job boards. LinkedIn now has far more activity than Monster.com. The labor market has already shifted to recruiting through social-networking…  but are there projects to support this shift? Ask your HR department if there is a plan for the new recruiting reality.
  2. TRAINING: With new corporate positions and functions, is training keeping up? Do you see training projects, especially projects to develop web-based training? Share relevant projects in your portfolio with the  training department; they may not be aware of all the opportunities for training!
  3. AUTOMATION: Your firm is always rolling out new applications, automation and tools. A changing business can greatly benefit from automation, especially when small groups suddenly grown and need to be more efficient. Yet while many firms are quite competent at buying or building applications, most fall short on quality user documentation and training. Software by itself doesn’t deliver improvement. It takes training to make it work; without training even “successful” software deployments fail to deliver expected benefits. Follow-up with last year’s software projects and this year’s new software projects. Share your fin dings with the training department.
  4. MOBILITY: More and more positions require laptops,  iPads, mobile phones or remote access. When you look at the contents of your portfolio of projects, do you see a clear mobility plan or just a bunch of disconnected projects with diffused goals. Is there a single head of mobility projects? If there are different mobility leaders, do they all know about all the projects? Share a cup of coffee and the contents of your portfolio with these managers.
  5. OUTSOURCING: Every PMO can expect some outsourcing projects 2012, especially outsourcing to Cloud services. Your firm has probably been outsourcing for years. Create your own project: an analysis of previous the last couple of years of outsourcing efforts! Have projects been effective? Expect earlier efforts to have missing data, invalid metrics and unclear goals. Before investing more money in 2012: develop a cost saving baseline, a set of best practices, and a case study that shows if there are any benefits beyond cost reductions (increasingly, studies show that innovation and other expected benefits are not happening).
  6. SITE ANALYSIS: When markets and products shift significantly, corporations rethink whether their facilities are in the right place. The skills in a PMO are great for performing a site analysis and determining the best location for different corporate functions. Speak with corporate planning and facilities to see if you can lend a hand.
  7. SPACE: The downturn in the economy has been going on for years. Leases that expire in 2012 were written when business conditions were very different. If your firm has a multitude of leases, is your firm looking at the entire space issue, or is it just a lease by lease negotiation? Are facilities managers aware of important projects in your portfolio? Speak with facilities and ask about their long term space management plan… a PMO’s planning and workflow skills could be a useful asset.
  8. HEALTH: A far-reaching change is coming in employee benefits. Corporations are scrambling to lower the cost of health insurance. Some firms are raising insurance rates for smokers and the obese. Others provide free gym memberships to encourage better heath. Whatever the method, lowering health costs and a healthy work force are no-brainer objectives… but developing these objectives into projects is no small task. The projects are usually reactive and executed in isolation from other business objectives. Your PMO may have just the right skills to help HR develop a more comprehensive plan for this complex issue.

As the economy continues to change, so too does the workforce. Firms not only need to constantly seek new talent, they need to constantly discover new ways to find the very best employees. And that’s just the beginning of the process. Having the right facilities in the right place for employees, supercharging productivity with the right applications, and seeing that they have the training they need to bring all of these elements together require more than a little coordination. But when you choose the right projects, and get all the sponsors working together, then you just might make a bit of magic happen! At least, that’s my Niccolls worth for today!

Posted in Best Practices, Decision Making, Improvement, Continuous or Not, Project Management Office, Unique Ideas | Tagged , , , , , , | Leave a comment

PMO Genius: Increasing The Maturity Of Your PMO

Posted on December 27, 2011 by Chris Niccolls

PMO projects fail. A lot. Why? Basically, it comes down to someone not delivering what they said they would. That individual may not think I was his fault. He might have recommend a firm to provide a product or service, and that firm goes out of business. The team members is not responsible for the firm’s demise, but was the firm’s finances examined? Many elements of failure can be predicted, but it’s always a trade off as to how much tracking can be done. Determining the balance between “good enough” and “everything possible” is a matter of philosophy and maturity. While different philosophy can start off a PMO at different stages, all PMO’s go through the same stages of maturity. Today’s Blog is going to look at the different stages of PMO maturity, how maturity it affects PMO operations, and what you need to do to get to the next stage!

Essentially, there are three states of PMO maturity. In the first stage, you focus on how well the PMO processes work. Most new PMO’s focus on the mechanics of project delivery (meeting project schedule and budget) while not tracking the delivery of project benefits. Sadly, most PMO’s mistakenly focus on the success of the PMO operation, not the project. The second stage  focuses on the project and can  report on whether it was successful or not. This is better, but it may still monitor only part of the value quoted in the project charter. PMOs in the third stage fully track and report on the value of the project, but very, very, few PMO reach this stage of maturity. Not surprising when you consider how few PMOs existed outside of construction and large industrial processes just a few years ago. Let’s break down the structure of each stage to understand how they work and how you can move your PMO to the next stage. Let’s start with stage 1 or…

PMO DELIVERY: New PMO’s have limited knowledge and limited resources. It makes sense for the PMO to focus on the “essentials.” However, new PMO’s make their first big mistake by assuming that the essentials are the project budget and schedule. If the project is closed on time, and under-budget, it must be successful. Right? WRONG! The reason the project was created was to obtain the benefits in the project charter. Let assume a project to purchase and install software that saves $1,000,000. Savings do not come from the addition of software; they come from the removal of… something. PMO Delivery focuses on additions: putting things in place (licenses, people, training, leases, etc.), and ensuring that deliverables are received. Few PMO projects monitor the project until the entire financial (or other improvement benefits) are received.

  • Goals: If your PMO is new, it may be appropriate to focus only on the project schedule and budget. You need to these foundational elements to be properly performed before later stages can be successful. However, senior management needs to know if the project did what it was supposed to do. If your PMO does not monitor projects until the full benefit is delivered, should the can the charter include benefits occurring after the project closes? On the other hand, big projects requires a payback period, sometimes a very long period. On the other hand if a PMO does not allow for a reasonable payback period, you may have a very thin project portfolio. Verify your PMOs mandate, and then determine if you need to monitor projects into later project stages.
  • Success Factors: You already know how to track the schedule and budget during the PMO Delivery stage. However, if the project “pays off” after the project is closed, you may want to consider three best practices…
  1. At the beginning of the project, have the sponsor identify how the FULL benefits will be measured and reported; ask to be included in the process. Track the percent of projects that generate these reports, post-PMO Delivery.
  2. At the close of the project, report the full cost vs. full benefit as stated in the Charter. Collect data for a few months, then produce a report for all projects. Are you monitoring 10% or 90% of the benefits? The answer may surprise you!
  3. At the close, provide the project owner with a specific template to report  benefits. If you don’t do this, a report but be produced but it may not accurately track benefits. By providing a template, the project owner will be more focused on key metrics that will keep the project on track. 

PROJECT EXECUTION: In PMO Delivery, we add elements. In Project Execution, we reduce elements. When our theoretical software project is in place, we would remove: old software licenses, redundant support fees, excess personnel, unneeded space, etc. If new revenue is expected, you need to verify that the revenue exists. Also, unexpected changes can occur after the PMO closes the project. Old and new software may be planned to run in parallel for three months, but if problems arise it may be for a year. Alternatively, a software update may alter functionality and reduce the effectiveness of the software. The longer the payback period, the greater the possibility that changes will occur to lower benefit.

  • Goals: You need to understand total project benefits. Where do projects benefits come from? Are some savings really cost avoidance? Do they count as hard savings?  Vacating a space can reduce costs, but not if the firm continues to pay for the vacated space? Understand common costs in your firm, especially employee costs. Reducing headcount is a real saving; not bringing in headcount that was approved (but not needed) is probably not a real saving. Likewise, moving “reduced” staff from one group to another may be cheating.
  • Success Factors: The secret to success is the ability to track results. Don’t be surprised if the benefits in the project charter are not auditable. Many departments do not produce meaningful management reports. Here are some best practices to help you:
  1. Standards: Create a list of standards on what type of “benefits” are: hard, soft, and “not allowed.” Ensure that these different categories of benefits are not confused and comingled.
  2. Specific Benefits: The Charter should not say more than, “The reduction is $100,000.” It needs to say,  “The benefit comes from retiring two contracts and eliminating one proofreader position.” Ensure that the project owner understands that the reductions must be supported by specific, agreed to, reports.
  3. Baseline: Establish a baseline at the start of the project, and compare it at the end of the project. Ideally, the report comes from third party: people, from HR; contracts, from procurement; etc. This process may reveal unofficial processes and resolve differences between reporting systems.
  4. Tracking Systems: At the start of the project, agree to the specific reports that will be used to provide data. Expect MAJOR differences in department and corporate reports (on headcount, contract payments, etc.).
  5. Specific Names: The longer it takes to deliver the full benefit, the harder it is to track results. Over the course of a year, the department may sponsor many projects, affecting overlapping staff, contracts, and resources.  Double counting benefits becomes more likely with time. Therefore, you need to name specific: shifts, individuals, contracts, and other resources to ensure that you can track results.

PRODUCT PRODUCTION: The first stage was adding, the second was removing, and this third stage is… maintaining. As the PMO evolves, so too will sponsors. In order to show larger benefits, sponsors often extend the payback period. There is no natural limit for the payback period, but generally three years is seen as the maximum. After that, three are too many operational changes to easily track the original project.  After all,  if 14 months after you started your project you are getting a $10,000 a month benefit… why wouldn’t you want to extend that into infinity?

  • Goals: Essentially the process is the same as in Project Execution, you just track it for a longer period. Rather than tracking every day, you may just “audit” every six months to ensure that the process is still working. Make your mantra, “If you can’t track it, you can’t count it as a benefit!”
  • Success Factors: The longer the project runs, the harder it is to track results. A very important project with a very long payback period is the perfect reason to work with a department to ensure that their management reports are based on the right metrics and report these metrics accurately.

As your firm comes to understand the benefits of a PMO, you need to constantly evolve your organization so that the expectations for a PMO do not exceed your ability to deliver. Over time, project sponsors will look for ways to enhance the value of each project, sometimes trying to count soft costs, sometimes trying to extend the length of the project, sometimes taking costs that should have been addressed and moving them outside of the monitoring process. In the end, senior management is much less concerned about these details than they are about the tangible benefits they expect to realize. By agreeing to which benefits are “real,” by having reports that can track the delivery of benefits, and by the PMO continuing the monitoring function until the full benefits are delivered… the PMO greatly increases the benefits the firm will see.  Not only are individual projects more likely to deliver full benefits, but your entire project portfolio will be more realistic in presenting assumptions and tracking benefits if all parties know that the entire life cycle will be tracked. Take a look and see which stage best describes your PMO, and how you can build towards the next stage.  Because that next stage is coming! And that’s my Niccolls worth for today!

Posted in Delivering Services, Improvement, Continuous or Not, Project Management Office | Tagged , , , , , | 1 Comment

Genius PMO: Plan Projects for the New Post Office

Posted on December 23, 2011 by Chris Niccolls

One of the big changes we can expect in 2012 is the restructuring of the US Post Office. The post office is one of those things that you expect to always be there. You drop off a letter in the mail box and no matter where in the world it’s going, it somehow gets to its destination… no matter how far away that is. While most countries give their Post Office a monopoly over the mail, the US has been offering alternatives for a long time. UPS was one of the first alternatives, delivering packages since 1907. In the 20’s and 30’s the Post Office was America’s largest employer but FedEx, DHL and other overnight and express delivery firms have been slowly eroding their profitability. Of course, the rise of the Internet and the down economy have accelerated problems at the Post Office. Does the Post Office still matter to major corporations? If it does, what are the critical projects that your firm needs to initiate in 2012? Let’s take a look at these issues… and more!

A century ago, a shining example of the synergy between the Post Office and business was the Sears Roebuck Company. Sears produced a mammoth catalog of household and farm products, including… pre-fabricated houses! Every home in small-town America had a Sears catalog, a “wish book”” as it was called, since everything you could wish for could be found in the Sears Catalog. Sears would manufacture or distribute whatever you wanted, and the post office would deliver it to your door!  Not bad for the pre-internet world! Catalog companies continue to thrive, and this “junk mail” has kept the Post Office in business. But first-class mail has declined as more orders are via email or an internet site, and more books, magazines and printed materials are sent electronically. The massive infrastructure the Post Office built at the beginning of the last century, is still out there: 500 massive processing centers; 31,000 post offices; 200,000 vehicles, 600,000 workers… still America’s 2nd largest employer.

The gap for the coming year will be $12 Billion, growing to $20 Billion in 2015. Radical changes are on the way! The current plan is to close up to half of the processing centers and 15% of the Post Offices by mid-2012. That only reduces expenses by $6 Billion, leaving another $14 Billion in as yet unannounced reductions. It seems likely that the shortfall will be even higher than the current $20 Billion estimate. Why? First, since the 60’s, the Post Office has consistently under-estimated shortfalls. Second, as the  Post Office reduces its services, and mail takes longer to arrive, customers will increasingly seek alternatives and revenue will fall even faster. The changes that are being discussed today really are just the beginning. This is the first down payment on a much, much bigger plan.

That’s why your firm needs a coherent plan to address the coming changes. Since responsibility for mail is distributed among man different groups, it would not be surprising to find that no one is really responsible  for this issue. Take a look at your PMO’s project portfolio.  Do you see any indication of even departmental planning for Post Office changes? In 2012 the most significant impact from these changes will be the end of “one day” delivery of 1st class mail and slower delivery (and higher cost) for everything else. It’s time for you to talk to some of your PMO clients and see if they have been thinking of this issue. Let’s break that down:

  • Mailing To Big Cities: Unless you are a direct-mail marketing firm, this shouldn’t create a major disruption. But if your firm produces a lot of mail, you probably use a service located by a major Post Office processing facility. As these change, the flow of mail in the US will change as well. Your current provider may be located in the wrong place. Do a little checking before processing centers begin to close in May of 2012.
  • Mailing To Towns: Smaller municipalities will be hit the hardest by closing, possibly adding days to delivery. If you are a regulated firm, you may have requirements on how long it takes for physical mail to be delivered (receipts for stock purchases, insurance documents, etc.). It may no longer be practical to deliver as much physical mail. Which regulations, if any, apply to your outbound mail? How do they differ for electronic mail? Do you also have contractual obligations?
  • Receiving Mail From Big Cities: Even if most of your clients live in large cities, will an extra day or two every month significantly impact your cash flow? What if you are a real estate, insurance or other type of firm that receives much of its monthly income via the mail?
  • Receiving Mail From Towns: If you receive much of your revenue by mail, AND your clients are primarily located in small towns that might delay your payments by a few more days (especially if payments are dated based on the postage date). Does this impact your revenues? Should your monthly calendar be adjusted so that bills are sent out a few days earlier? What business processes would need to shift to meet the new timetable? If this is an issue in 2012, it will be a bigger issue by 2015. By then, services will be cut back even further… perhaps not just eliminating post offices, but cutting back on mailboxes and even reducing delivery or pickup to all homes in very small towns.
  • On-line Delivery: Your firm probably has some form of electronic communication with clients in addition to email. A website where they can order products, make payments, file claims and perform other tasks that might be sent via the mail.  Given ongoing shift in mail, you should see a LOT of projects to adjust and expand existing software. If not, identify the owner of the current software and ask about their plans. How aware are the application owners of upcoming changes to the Post Office? Talk to them!
  • Changing Regulations: As the Post Office shrinks, email and other electronic communications are becoming the new standard. Over the next few years we can expect more of the regulations controlling mail and mail-based receipts be re-written, providing more direct instructions for how electronic delivery will work. Identify departments in your firm send or receive regulated mail. Ask if there are significant differences in the regulations if the mail is physical or electronic? Discuss the potential changes that the department manager believes could happen if the volume of work shifted to electronic under current regulations, and what potential new regulations could occur. Also check with your legal and compliance departments to see if they are aware of new regulations on the horizon.

The coming changes in the US Post Office are going to be huge! We don’t know how extensive the changes will be, but we do know that they will be far more than what is on the table for 2012. If your PMO’s project portfolio doesn’t have any project for paper mail, or for building or expanding on-line from processing and billing, then the message of change may have not penetrated your firm. Start asking your PMO’s clients if they understand these changes and are planning new projects. The responsibility for mail services is probably highly dispersed… see if you can help coordinate individual projects into an enterprise plan. Remember, if mail isn’t a top priority, now is the time to make sure that a high-priority  project doesn’t sneak up on you! And that’s my Niccolls’ worth for today!

Posted in Best Practices, Common Sense Contracting, Decision Making, Delivering Services, Improvement, Continuous or Not, Project Management Office, Unique Ideas | Tagged , , , , | Leave a comment

Genius PMO: Let’s Kill Email! Lessons From A Leading Technology Firm…

Posted on December 20, 2011 by Chris Niccolls

In case you haven’t heard the big news yet, Atos (a multi-Billion dollar IT firm) announced that it plans the global elimination of email from all of its offices. Now that’s a big, bold move! A move that is going to trigger a cascade of  projects at Atos. Maybe, it should also trigger some projects for your project portfolio? Just how did Atos come to the conclusion that email was bad for the corporation, and have they learned something that we all need to know?  Today, we’re going to take a deeper look at Atos’ decision to kill email. Let’s dive right in!

We all have issues with email. We get emails we don’t want. We get emails that don’t look like they don’t apply to us, but we have to at least scan all 20 pages to see if have some role that is buried in the text. There are occasional “snowball fights,” emails accidentally sent to thousands of users, generating many emails like: “you used the wrong list”, “guys, stop replying to this email!”, “just tell the guy who sent this to stop… NOT the whole distribution”,  “Aren’t you listening STOP! STOP!”… until your email box is overflowing! Rather than just getting annoyed, the managers at Atos decided to quantify the opportunities to improve life… without email”

  • To start with, Atos is fairly big… 80,00 employees in 42 countries.
  • Atos found that the average employee receives 100 emails a day. Does this sound like your organization?
  • Workers spend time at work and at home (and everywhere in between) reading and responding to emails.
  • Only 15% of emails were in any way useful or relevant to their work. The remaining 85% were wasted time.
  • Work hours can be counted a LOT of different ways, but this “wasted” time is equivalent to 20,000 to 40,000 FTE’s, depending on how you measure work hours.
  • To this enormous cost we can add the cost of email servers, email archiving, and emails that need to be analyzed for e-discovery when your firm is sued.
  • Just by making their “email is bad” announcement, people are a bit more careful and emails have dropped by 20%.

When we entered the corporate computer age, somewhere in the 80s-90s, we were told that we would soon be freed of the tyranny of paper. The paperless office would be led by email and our lives would improve. Well, as is often the case, one tyranny often replaces another. While there are many advantages to email (how would I ever cope without all of my vital… Viagra, Canadian pharmaceuticals, mortgage refinancing… announcements?), having a cloud of unwanted mail follow me on my computer, my laptop,  my cell phone… is exhausting! If the numbers that Atos produced are even a magnitude of order less, this could be the single largest opportunity in this decade for your firm to improve efficiency. But what do you do with this information? Here are a few steps you should consider:

  1. Email Owners: Who owns email in your firm? There probably is no single answer, but the managers of email are probably somewhere in IT. Start there and find out if there is support for some method of restraining the growth of email. What is the cost of maintaining the email service in your organization? Speak with your legal and compliance departments. What is your firm’s policy for retaining documents and how often are these archives called up… perhaps for lawsuits? What is the cost of compliance with legal requirements, including document reviews during e-discovery? Also speak with HR. How much of their time is spent with email issues: things said in anger in email, harassment issues, misquoted compensation, and agreements made with employees that should never have been made. As all of these groups about the cost of having an email system.
  2. Usage: Can IT provide you with information on your firm’s use of email? What is the average number of emails per day… per employee? What was the highest peak day? What is the year to year trend, and is it climbing? Are there departments with higher than average email volumes? If the volumes are similar to Atos, then their other logic may apply as well. If the trend is a sharp rise in email, look at the last five years (or however much data IT has). If the problem is bad, will it get considerably worse?
  3. The Users: Seek out departments with an interest in email improvement. Perhaps those with the highest volumes, or those where email is not a part of a production process. You may have already had conversations with department heads who are frustrated with email, but don’t have any alternatives. Begin to map out potential advocates for change, and the potential value of change in each department.
  4. Pain Points: What are the problems that each department is facing and how would an alternative to email help them? Since the beginning of the year is almost here, you might want to find out which departments have the biggest gap between what they need for a 2112 budget and what they received.  Are some departments faced with multi-year financial shortfalls, but no plan on how to address the lack of funding? Understand these pain points and if a change in email would address them, or at least free up the resources that could fund a solution.
  5. Project Portfolio: From these steps you should now have a reasonable vision of the size of the opportunity and the level of support for change. From these conversations, there may be some immediate projects for your portfolio. But more importantly, add to your 2012  portfolio a project to further develop the opportunity and the support for a radical change in email. Perhaps you need to follow the example of Atos and replace email with a newer technology, or there may be a better way of taming your email beast. Whatever the solution, if the magnitude of your problem is truly great, you’re going to need a powerful case study and an exceptionally highly placed sponsor. The point of this project is to see if you can build the case and find the sponsor!

If your firm has a truly massive email problem (and most of us do), then you have an opportunity to develop some incredibly powerful projects. Seize the opportunity to free your fellow workers from the tyranny of email, and drive a revolution in corporate communication! And that’s my Niccolls worth for today!

Posted in Decision Making, Delivering Services, Project Management Office, Unique Ideas | Tagged , , , , , , | 1 Comment

Genius PMO: How To Manage Like Gordon Ramsay In 10 Steps, Part II

Posted on December 17, 2011 by Chris Niccolls

Today we continue with our Foodie guide to project management. In our last blog we looked at the work of media star Gordon Ramsay. Today he’s a foul mouthed, ill-tempered egomaniac… but that’s mostly for the ratings. 10 years ago when he began his television career, “Kitchen Nightmares” took a serious look at failing restaurants and gave them straight-forward  advice on how to  fix their problems. We ‘went over the first four lessons from Gordon Ramsay in our last blog, and today we’re going to cover the next six steps to learn how to manage like Gordon Ramsay! Let’s jump right in with…

  1. SERVICE: In most episodes, when things fall apart the kitchen staff blames the wait staff, and the wait staff blames the kitchen staff. Even if the food is great, if the service is bad you’ll take your business elsewhere. Projects often have contending groups that blame each other for production problems. When building the project charter, always try to let all the different voices on the team be heard. Make sure that the proposed plan solves the problem, and doesn’t just create a false sense of team harmony. If the project just slaps a coat of paint on a failing process… dig a little deeper and get to the real problems. For those of you that aren’t familiar with the Kaisen approach to process improvement, it’s all about finding the core problem, the Gemba. Looks like that’s Ramsay’s PMO menu is international!
  2. MANAGEMENT: A frequent theme is owners are not managing their business. Either no one runs it or someone (the chef or the maître d’hôtel) is nominally in command but is in way over their heads. Does the head of the sponsoring group have real operational knowledge of his group, or is someone else in the organization the real expert for the group? Many groups are managed by individual who manage a portfolio of departments, some of which they are unfamiliar with or have only a modest interest in. When a sponsor does not understand the operation it does not necessarily doom the project, but if you cannot identify the “real” manager, the one who understands and controls the operation, this is usually a danger sign.
  3. MENU: Much of Ramsay’s management wisdom is about the menu. Too many ingredients and fussy preparation are bad… it takes too much effort and limits how many people the kitchen can serve. Likewise, don’t have overly extensive menus. Serve 10 items for dinner, not 100… it’s too had to control a kitchen with so much going on. This sounds like lean management, with perhaps just a dollop of Kaizen thrown in. Keeping it as simple as possible is always a good rule of management.
  4. NEGOTIATION: Owners are often tied up in the color scheme or a “theme” menu  or some other peripheral issue rather than the food or the service. Is your project focused on the critical issues or on mere window dressing? The sponsor ultimately decides which projects they are interested in, but the PMO and the project managers need to keep the process honest. You may not be able to compel, but you can influence. Will even REALLY nice curtains bring in the customers you need?  Don’t be afraid to speak your mind, especially if you can back up your opinion with results from previous projects. And even Ramsay occasionally needs to bring in someone from the industry to back up his point…. use expert opinions when you need them!
  5. SATISFACTION: When you add up all of these items, you either do get value for your money or you don’t. Owners frequently fight with Ramsay over the service issues he raises. The owner’s defense is usually that the customers are very satisfied. Ramsay reminds owners that satisfaction by a few remaining customers is less important than the dissatisfaction of many empty seats. Make sure you are measuring satisfaction correctly. Be prepared for the consequences of improved satisfaction. Every service that I worked with underserved its mandate; corporate services always have “empty seats.” If your project improves a service, work volume may rise. That either leads to a drop-off in performances (every been in a busy restaurant where it takes far too long to serve you?) or an escalation in cost as new staff are added. When an improvement project is for a service or department that does not generate revenue, success can be a problem. Does your project plan the consequences of success? Depending on the service, you may be able to get up to 70% or 80% capacity before there are problems, but some services start to falter a 50% or lower. Be very suspicious if your project assumes that a service working at 60% can add 40% more work with no additional costs.
  6. FOLLOWUP: Having one good night, or filling every seat one time is good… but it’s not enough to save a struggling restaurant. Reaching this “turn-around” point is like reaching the end of a PMO project. Everyone has done what they’ve said they would, and when the “big night” arrives themeasures of sucess are tested (customer satisfaction, quality of the project, turnaround time on service, revenue, etc.) and we either met our objectives or we didn’t. On a project, this is where we perform our closing processes and go home. On Kitchen Nightmares, this is where Ramsay… goes away. But, a few days later he drops in. Usually unannounced. He does a quick check and sees if everyone is still following the new processes. After just a few days it’s not unusual that the owners put back the old menu or fall back into bad habits. Ramsay makes corrections and… goes away. A few weeks later,  maybe even a few months later he returns to make more corrections (if needed). Many PMO lack this follow-up. Yes, we measure if the PMO’s management of the project was on budget and on schedule, but we usually do not measure if the project delivered the corporate benefit it was supposed to and virtually no PMO tracks projects over a longer period. Yet, after projects turn into products the very problems that were controlled during the PMO stage often return to afflict the product when it is in production.  What is the mandate for your PMO?

Saving a failing restaurant is hard. Completing a challenging project is just as hard. A new menu or re-launching a restaurant can save a restaurant. Nonetheless, owners often return to their old habits (and menus) when the cameras leave. Corporate managers have egos that are just as big and habits that are just as bad. A horrifying, but instructive, statistic is that of all the restaurants on the first three years of his Kitchen Nightmares series, only 2 are still in business. That’s AFTER they receive international media exposure. Most transformative projects fail. When a small country Inn fails, that’s it. The owners have no other resources to stay in business. When a major project in a big corporation fails, the results can be buried in department-wide reports or may simply not be tracked.

If you want to be the superstar of your PMO, then manage your project the way Gordon Ramsay manages his operations. Follow all the steps, don’t take any shortcuts, make sure that everyone does what they say they will and FOLLLOW-UP to make sure that the changes your project brings don’t just fade away. And that’s my Niccolls worth for today!

Posted in Best Practices, Decision Making, Improvement, Continuous or Not, Project Management Office, Unique Ideas | Tagged , , , , , , | 1 Comment

Genius PMO: How To Manage Like Gordon Ramsay In 10 Steps, Part I

Posted on December 15, 2011 by Chris Niccolls

I’m a foodie. Food fascinates me, in many different ways. It’s not just eating food, it’s discovering new types of foods, learning about the history of different dishes and of course, finding new restaurants. It’s hard to be part of the foodie scene these days these days without watching the numerous food channels and food shows. In this increasingly crowded space, the biggest superstar is: Gordon Ramsay, the Scottish chef with attitude! And a lot of anger. And quite a foul mouth.

At least that’s the impression that you get if you watch him today. On his way to becoming a superstar, Gordon learned that ratings soar when he loses his temper. Like many other managers, he has learned the secret of management by intimidation. Which is a pity. In the first three years of his first UK show (Kitchen Nightmares) Ramsay was quite brilliant! He was still profane, but he was also genuinely profound. When you watch him at work, you can clearly see that he is an experienced project manager at his best. Let’s take a closer look at  the young Mr. Ramsay’s work and see if we can learn something!

Every episode begins with Ramsay going over the key issues with the owners. The issues were usually: not enough customers to pay the bills; enough customers, but everything falls apart at high volume; used to have customers but lost them; they have customers but they aren’t making any money; or kitchen and wait staff are fighting with each other. These are the same issues that corporate services face. The projects that they sponsor become the improvement projects that fill the PMO’s project portfolio: increase utilization, stabilize production at higher volumes, elevate customer satisfaction, reduce cost of operation, resolve conflicting processes. Gordon Ramsay may be an entrepreneur and a renowned chef, but he is also a talented project manager that  can teach us a lot about process improvement.

After the first three years, Kitchen Nightmares (and all of Ramsay’s subsequent shows) spend less time on fixing problems and more time on screaming at “clients.” Hopefully, this is not the inevitable career path that we all face. Although, after dealing with one restaurant owner after another who doesn’t understand what the customer wants and who won’t make the changes that he agreed to or who is more interested in the decor than in service levels…. you can almost (but not quite) forgive him for blowing his stack. If nothing else, the later Ramsay provides us with great training videos for project managers… showing us each how we reach the breaking point and beyond. Likewise, the early Ramsay shows us how to fix the basic problems:

  1. NEIGHBORHOOD: Every show starts with Ramsay looking at the Restaurant to understand: who are the customers, who are the competitors, what are the local foods/resources, how lively is the location (volume of customers), what are the local demographics (price sensitivity, interest in different cuisines). When working on your projects, you need to gather similar information. For example, if your project is for a group with very high-income individuals and thick profit margins, they may be content with very expensive services that the rest of your firm either cannot afford or does not want to pay for. All other project issues may arise from a mismatch between the “neighborhood” and the service.
  2. GOALS: Next Ramsay speaks with the owner, to identify the perceived problem. Almost always the answer is, “I don’t know!” or the manager has some opinions but they are completely wrong. Interestingly more than half the time the owner has no experience in managing a restaurant. They liked the idea of running a restaurant and they have the money… which is often raised by raiding their retirement accounts andmortgaging their homes. Hopefully, the project sponsors won’t lose their homes if the project fails, but these managers have undoubtedly “mortgaged” their political capital with the firm after several unsuccessful attempts to fix problems on their own. Understand that the high stakes for the sponsoring department (and managers) can lead to tempers fraying.
  3. KITCHEN: Naturally, Ramsay wants to see the kitchen. Here, two different problems arise. Frequently, the cooks don’t know how to cook, or don’t have the experience to keep up at volume times. Just as often, the kitchen is set up poorly, lacking equipment,  or space, or proper workflow.  The production area for your project is no different. If the team lacks key skills or sufficient experience, performance suffers. But you also need to consider if you have too many skills or even too many “cooks.” Finding the right balance is the key.
  4. INGREDIENTS: A separate issue in the kitchen is using the right ingredients. Of course, the “right ingredients” changes from situation to situation. For your project, think in terms of resources. The production area might have its own macros and scripts that should be replaced by a third part package. Or other software and hardware elements in the production flow may be the wrong type. Don’t accept that the project is following best practices just because the sponsor thinks it’s a good idea.

We’ve got six more steps to cover, but no more room for today! In our next blog we’ll cover the rest of what Gordon Ramsay can teach us about project management. But for today, that’s my Niccolls worth!

Posted in Delivering Services, Improvement, Continuous or Not, Project Management Office, Unique Ideas | Tagged , , , , , | 1 Comment

Genius PMO: Five Steps Turn Your PMO Into An Innovation Center!

Posted on December 11, 2011 by Chris Niccolls

I often quote TED talks in my Blogs, and today is no exception. Steve Johnson gives a great talk about where great ideas come from.  Johnson links the explosion of ideas that defines modern culture to the creation of the English coffee house. Today, we’re going to take a look at the coffee house, find out why creative ideas could germinate there, and how we can apply this to our PMOs.

The coffee house arrived in England in 1652, and provided three of the key ingredients of innovation. First, coffee replaced the earlier breakfast drinks of choice in England… beer and hard cider.  Instead of the workforce taking a depressant before they headed off to their less than stimulating work, they now started the day off with a stimulant. Now that you’re stimulated you find that the coffee house is a space filled with other stimulated and generally interesting people. Remember, coffee is new, and coffee drinkers tend to be better educated and are often leading edge innovators. Which leads us to the third element, safety. European universities had not yet evolved into safe places for intellectuals to have uninhibited discussions. The Spanish Inquisition was winding down in Europe, but still active. The Salem Witch Trials were just gearing up in America. And Cromwell’s forces had just taken control of England and were busily banning music, dance and political parties. Coffee houses were one of a very few places where you could gather and have an uninhibited conversation.

What happened next, is a chicken and egg story. Coffee houses were filled with inventors, writers,  and travelers of all sorts. It was natural that they talked about their adventures, their aspirations and new ideas. Somewhere along the way, money moved into the coffee house. A clever group at one table, might have an expedition funded by a group at another table, and insured by a third group. Later, shares or futures might be sold off for further financing. The coffee house becomes a project factory. A very effective project factory! There was an explosion of innovation over the next couple of hundred years, and almost all of these innovations at least passed through a coffee house at some point in their evolution. That’s not a coincidence. There is something about this type of  environment that spurs innovation, and the creation of new projects. So we have a lot to learn from the coffee house.

Today, the project factory is a Project Management Office (PMO) or Process Improvement department. However, the PMO is not always the center of innovation in a firm. There are many different types of PMO’s, with different mandates, budgets and resources. Understanding that we’re all different, there are some steps that we can all take to drive creativity in our organizations. Remember, if you can increase creativity in your organization the “good ideas” that are generated will translate into innovative projects and higher-quality project portfolios. Innovation is incredibly valuable to a PMO, and project manager should drive innovation whenever possible. Here are five simple steps to create your own coffee house environment:

  1. Meeting Place: It seems almost too obvious to mention, but a key aspect of project team meetings is that it brings together people from around the firm, with all sorts of different backgrounds.
  2. Safe Environment: As I said earlier, coffee houses arose at a time of turmoil and tension. While I don’t want to draw any direct connections with the Spanish Inquisition, it shouldn’t be surprising to most of you that many new PMO’s were specifically created because corporations are unhappy with profitability, and by extension with the under performing managers and departments. There is certainly tension in these departments, perhaps even fear. Knowing that there is at least one place for team members to speak openly is very important.
  3. New Tools and Ideas: Just as new ideas were brought to the coffee house by travelers, so too can the PMO seed new ideas throughout the firm. It means that every project manager needs to read and meet with peers so that they are constantly exposed to new ideas. This makes them idea generators when they meet with their teams, which spreads innovation throughout the firm.
  4. Learn from Experiences: Not all tools will work, or work well in your firm. Many managers simply do not believe that a tool that works for other firms or even for other departments, will work for them. But if you have evidence from other successful projects, you can move ideas and tools closer to acceptance. You can also use a combination of TRIZ questions and Fishbone diagrams to identify the contradiction… the element within the working solution or tool that “won’t work here!”
  5. Repeat:  One of the key observations that Steve Johnson made in his presentation was that no innovation, no flash of insight, no “Eureka” moment really happened in a moment. The story of the apple falling on Newton, leading to the law of gravity is a good story, a way of condensing years of thought and research into a simple tale. But the reality is that every flash of insight is preceded by months or years of careful thought. It is the same today in a major corporation. It takes time for new ideas to be absorbed into the culture. The PMO needs to present good ideas to teams repeatedly.  Eventually, team members will bring these ideas (and perhaps a few of their own) and a new perspective back to their groups. That’s how new and innovative projects will find their way back to your project portfolio!

It’s happened before and it will happen again. Bring together people with different background who are trying to get something done… protect them, stimulate them and ideas and projects flow forth. You can be the coffee house of the future, becoming the final steps that turn innovation into profitable projects. And if you have the budget for it… bring the Mocachino’s! And that’s my Niccolls worth for today!

Posted in Best Practices, Delivering Services, Improvement, Continuous or Not, Learning and Development, Project Management Office, Unique Ideas | Tagged , , , , , , | Leave a comment

Genius PMO: Five Steps to An Honest Project Team!

Posted on December 8, 2011 by Chris Niccolls

Every profession has unspoken agreements and dark little secrets. In the world of project management and PMO’s our objective is to make projects more “transparent” and measurable, so that projects can be more successful. You might say that one of the basic goals of project management is to make project work more honest. Yet even PMO managers have their little secrets. The most important secret of every PMO, a secret that every project manager MUST understand, is that every member of a project team is a LIAR! Horrible, isn’t it? Here you are, trying to make the world a better place and your entire team is lying to you, hiding information, exaggerating results, “forgetting” to bring up important details and being deceptive. Sorry… I lied. There TWO important secrets you must understand if you operate a PMO. The first is that everyone on your project team is LIAR. The second secret is… SO ARE YOU!

As a society, we like to believe that lies are the exception, and that people who lie frequently must be aberrant, even mentally unstable. But this just isn’t so. In an excellent presentation on TED Talks, Pamela Meyer (the author of “Liespotting”) tells us that we are programmed to lie. Even babies lie. Meyer tells us that when babies left alone in a room are videotaped, some will cry until someone arrives and others do something different. They crying and then looking around to see if anyone responds; then they cry again and wait. This is fake crying, a lie to make parents pay attention to the baby. (OK… parents out there…  in your heart you always suspected this, didn’t you!) Meyers also tells us that teen-age girls lie to their mothers in 1 out of 5 conversations (a little bit less of a surprise here?).

According to Meyer, the average person lies 10 to 200 times a day! How do we even have the energy to think up 200 lies every day? The answer lies in a recent psychology study, where subjects were spoken to for 10 minutes while being videotaped. All the subjects stated that they were 100% truthful, yet a review of the tapes showed that 60% of the subjects told at least one lie. When the subjects looked at the videotape,  they were stunned to find that they told lies! They did not remember lying. So we can add one more lie to our long list of deceptions… we even lie to ourselves.  It’s not surprising that corporate executive’s lie (take Enron), political figures lie (take your pick!), and every project team is filled with liars.

There are a lot of reasons why we lie: to protect ourselves, to protect others, to prevent others from misunderstanding the facts, to avoid punishment, to get something we want, or to keep a previous lie hidden. Lies vary from the tiniest white lie to real whoppers. The problem is that when we tell a lie we may think many lies are very small and very innocent. The reality is once a lie is out in the open, we don’t know how long a lie will persist or how big it will grow. Not convinced? Consider these classics: “We have indisputable evidence that  Iraq has WMDs”, “Monica Lewinski? Who’s Monica Lewinski?”, “It may be a new fund, but take Bernie Madoff’s word, it’s as solid as a rock!” Meyers tells us that the cost of corporate lying is the US just under $1 trillion a year!

If lies are so deeply embedded in the human psyche, what can a project manager do to ensure honesty and truthfulness on the project team? I doubt if you can eliminate very single misleading statement, but there are ways that you can inject a little honesty into your project meetings: 

  1. Ground Rules: When a project starts out and you set the ground rules, spend a few minutes on the concept of honesty and how it’s necessary for the operation of the team. Keep it lighthearted, but let everyone know that your expectation is that everyone will feel free to tell the truth, and to call-out team members when they aren’t truthful. Don’t just say you are going to do this, let the team vote on it. Do a secret ballot first, a simple yes or no vote on a slip of paper. If its unanimous, memorialize this (but don’t dwell on it) in the minutes. If there are any “no” votes, you need to explore the problem and move the group to a unanimous vote for honesty.
  2. Accountability: Groups are harder to hold accountable than individuals, and where there is no clear ownership there is no accountability. Wherever  your team has not defined accountability, lies… especially lies of omission… tend to pile up. Keep accountability high, and make sure that specific individuals are accountable whenever possible.
  3. Transparency: We lie because lies often work. In an environment where the truth is ambiguous, lies are easier to justify and become more frequent. Make sure that the metrics your team created are honest. If projects are consistently finishing below budget and ahead of schedule, then your team’s fear of failure has led to heavily padded estimates. If projects are consistently late and over-budget, a lack of confidence is resulting in unrealistic estimates that temporarily satisfy clients or managers. Train your project managers to use historical project information to push back on project estimates.
  4. Trust: Liars make choices about who they lie to, and often complain that they were pressured into lying. Make sure that you and your project managers are seen as honest, and resources that team members can turn to if they are in a situation that could lead to a lie. Make sure that the team can anonymously report on their experiences on a project team, if they felt that they could be totally honest, and if the experience changed how they view the firm and their own management style.
  5. Practice: Lead by example. Be honest. Ensure that your project managers are honest with your team. After a while, people will learn that when they work with your PMO, dishonest team members just don’t have as good an experience as they could. Even individuals who make the cost economical use of truth will learn to splurge a little on a project team.

Lying is a part of being human. We can’t stop people from lying, but we can create an environment where honesty is more rewarding than lying. Remember, a lie takes at least people. If you don’t accept a mistruth it destroys the lie. Lies, misinformation and lack of information all have a high cost for your projects. Keep your teams honest and you will keep your projects cost effective. And that’s my Niccolls worth for today!

Posted in Decision Making, Expectations and Rewards, Improvement, Continuous or Not, Learning and Development, Project Management Office, Unique Ideas | Tagged , , , , , , | 2 Comments

Genius PMO: Tracking A Project’s Financial Benefit Is Pure Genius

Posted on December 4, 2011 by Chris Niccolls

At the Wednesday (11/30) meeting of the  NYC chapter of the Project Management Institute, Marc Resch gave a compelling presentation on the importance of cash flow models.  In a very short time, Mr. Resch covered a lot of important territory. While I don’t have the room to go into all of these ideas here, I did want to focus on a few key concepts.  Specifically this Blog is going to focus on the question, “How do we track the benefits that are created through PMO projects?” Sounds simple right? Maybe not! Resch made a convincing argument that most PMO’s are missing this point. They are trying to track project value, but they have chosen to track the wrong metrics. Let’s dig and see what we find!

I: TRACK THE RIGHT PMO METRIC: Generally, we track whether our projects are on time and on budget. Unfortunately, many PMO Directors stop at these two metrics, and miss what really counts… the successful delivery of the project! Even when you are on time and on budget, projects… perhaps the majority of projects… fail to deliver the benefits they promised. Software fails, training doesn’t always improve performance, and of course the cost/benefit assumptions can be wrong. Because of the pressure to show tangible improvement, projects exaggerate their benefits. For example: extending the payback period (for more than three years); omitting key costs; failing to allow for the cost of money; and benefits that don’t really translate into money. What’s the solution?

II: COST IT CORRECTLY: You need to begin with the right cost assumptions, not just the assumptions that you think will get the project approved. A PMO needs to challenge the assumptions of departments when they create a questionable cost-benefit analysis (which the senior sponsor of the project may have not approved, or even be aware of). Many business unit managers may not know how to develop a comprehensive project cost analysis. By pushing back, and explaining why the numbers may be wrong, the PMO can spread knowledge about how to build better financial models for projects.  When projects have accurately forecasted benefits, unprofitable projects can be identified and eliminated earlier in the process. Projects that should go forward will have trackable benefits. Reporting to senior management that a $1 million project is 3% under budget is… OK. But, it is far better to report that a $1 million project will hit break even in 60 days, deliver a benefit of $20,000 per month through 2012, and then $100,0000 per month for the 1st six months of 2013.  When you talk in terms of the financial results of a project, you speak the same language as your senior management.

III: VERIFY THE BENEFITS: The financial benefits of a project are the true “last deliverable” of every project. However, this deliverable, the justification for doing the project in the first place, may only be fully realized months or years after the project is closed… making it impossible to know, at the time of the closing, if the project actually succeeded. Which is a pretty strange management concept. many things could (and do) go wrong, or go unmeasured. You could address this a couple of ways. You could keep the project open until the benefits are verified, but this wouldn’t work with the culture of most firms. The other option is to look at every project as two separate projects. The primary project is the traditional PMO work; you close by rating the budget and schedule (on-time, on-budget) and other qualities of project management. The second project is follow up on the BENEFITS of the project; here, we have a checkup at set intervals, say every six months. For a project that runs one year past the project close, your PMO would check-in once and then have a final closing that analyzes the benefits of the project.

IIII: SORT THE PROJECT  TYPES: In the broadest sense a PMO manages two types of projects – projects you must do and projects that you choose to do. The projects you must do are “cost of doing business” projects. The rest are “improvement” projects that bring benefits to your firm… lower costs, higher volume improved quality, etc. Because PMO’s are under pressure to show a financial benefit, and “must do” projects often do not have direct financial benefits, there is great temptation to show some sort of dollar benefit. Even when teh accounting of benefits is absolutely honest, the assumption that senior management gives priority to projects associated with financial benefits, both the line manager and the PMO director waste a lot of time trying to show benefits that don’t exist. By looking at all projects as just two types, you can avoid this trap. Take a look…

  1. Cost of Doing Business: You MUST do this project. Perhaps this is because of a legal requirement, or it’s a necessary business function (ex. planning a move to a new office). There might be some financial benefit, but if there is it is incidental. You can’t classify “avoiding a fine” as a financial benefit. Instead, the key project question is, “Do I design this project based on the lowest cost or the lowest risk of failure?” If your firm could be fined $50, you will probably choose the least-expensive  option… which might be to do nothing and get a $50 fine every now and then. But if the risk is that your firm will be closed, then you probably want the “lowest risk” option.
  2. Improvement: An improvement project is driven by a need to improve… something. An improvement project may get combined with a “must do” project, but these are usually separate. The project may not have a direct financial benefit, such as an improvement in customer satisfaction.  Here the key project design question is, “Do I want to maximize the benefits of this project, or do I want to minimize the cost?” If you could scale up the project at a low cost, would you argue that it should be expanded so that greater financial benefits can be realized? Or are the benefits very marginal, in which case making it a very minimal project might improve the financial analysis.

Thanks again for Marc Resch for reminding us of the importance of realistic and truthful financial analysis in project management. While we don’t do project management just for the purpose of saving or generating money, PMOs are financed by our firms in order to further financial goals. Yet, we often get so caught up in the process of tracking our projects that we focus on tracking the project management and not the project itself.  Cost and schedule matter, but project results matter more. And that’s my Niccolls worth for today!

Posted in 4th Sigma, Best Practices, Decision Making, Improvement, Continuous or Not, Learning and Development, Project Management Office, Unique Ideas | Tagged , , , , , | 2 Comments