By Rick Morris
Executives often set budgets and timelines for projects before picking a project manager. This puts the cart before the horse, often forcing the project manager to execute a poorly thought-out decision. Selecting trained, experienced project managers and getting their advice on budgeting and deadlines improves the likelihood of success.
In the November/December 2008 issue of Industrial Management, I wrote an article titled “Stop the Insanity of Failing Projects!” Unfortunately, the insanity continues. Previously, we explored the concept of the triple constraint (cost, time, quality) and how that can veer a company off course if used inappropriately. This time, we will look at the value that a project manager can bring and how projects are selected in the first place.
If you haven’t guessed by now, truly succeeding at business requires you to manage change and projects appropriately. This means that you need to trust in the value of your project manager. Professionals and academics debate and produce studies about the value of project management and what it can provide to an organization. What is funny is how we go about performing projects in most organizations. The craziness begins with the actual selection of the project manager.
In my seminars, I ask the question, “How many people here are practicing project managers?” Roughly 95 percent of the people in the room raise their hands. While their hands still are raised, I ask, “Now, how many people came out of college wanting to be a project manager?” The hands, except for one or two, almost always will drop. This is what we call the halo effect gone wild. By definition, the halo effect means, according to Dictionary.com: “A potential inaccuracy in observation, as of a person, due to overgeneralization from a limited amount of evidence or the influence of preconceived beliefs or a priori hypotheses.”
Essentially, most project managers were good at doing something else, so they were promoted or selected as a project manager. This stems from the belief that anyone can do project management. Although it is easy to make this leap, it simply is not true.
How many times do you think the chief financial officer of an organization walks up to a man in the second year of his employment at an entry level job and says, “You finished high school math, right? Come close the books for us in the fourth quarter. It is just debits and credits, no big deal.” Becoming an accountant takes education, practice and a thoroughness to complete the job appropriately. You don’t simply find people good at math and trust them with your finances. However, this is done on almost a daily basis to project managers. There are times that the right person is selected for that role, and they thrive and become fantastic project managers. The proof, unfortunately, is in the statistics. Based on the studies that have been performed, nearly half to almost 75 percent of projects fail to hit their target.
I am a product of the halo effect. I started my career as a personal computer technician and worked my way up to a management position. Since I succeeded at my initial role, my managers decided that I would do a great job managing people to perform my role. This is not always the case. I like to think that I am one of the Darwinian survivors who happened to be successful. The truth is that most people selected to perform project management do not have the skills, temperament or proper judgment to be successful as a project manager. There are those readers out there who will disagree and say, “What about the small projects that are just department-based that do not last long?” That brings us to the second major understanding: Not everything is a project.
Projects need to be defined in greater detail than just “anything more than 40 hours,” or “anything that touches two or more teams.” This creates a large number of projects with too few project managers. This then creates the need to give projects to anybody who has the capacity to oversee the effort. This requires organizations to define two different sets of metrics.
The first metric consists of project size and governance requirements. Based on the size of budget, effort and business value, a project tier system needs to be developed. Most organizations create three to four tiers. For instance, a project with more than 1,000 hours of effort that touches all customers and is the largest budgeted item for the year is a Tier 1. Tier 2 is a smaller effort that requires significant governance (such as an internal software development initiative), and Tier 3 is less than 200 hours of effort. Only your organization can create the proper tiers. However, the point is to realize that in project management one size does not fit all.
The second metric is to determine the amount of governance activity required for each tier. For example, a software development Tier 1 project may require use cases, functional and technical requirements, full testing plans – including unit, functional and regression – and up to three or four meetings per week. A Tier 3 may require only a one-page form and a couple of meetings for the entire effort. Again, there is no exact science, but you should be able to segment the amount of effort and type of projects. Once the governance has been decided, then you estimate the percentage of time the project manager must spend to complete the governance.
Combining the two metrics will bring a shocking realization to companies that have 145 projects and only five project managers. At 100 percent per project manager, that company only has 500 percent of maximum effort to assign. In the examples above, a Tier 1 may require a project manager to work 20 hours per week (50 percent of the project manager’s effort in a 40-hour workweek), where a Tier 3 would consume four hours (10 percent of the effort, or workweek). This generic percentage of effort for each tiered project helps executives figure out how many projects their company can handle simultaneously. So a company with 145 projects identified might have the project management capacity to run only a portion of those.
Assuming now that you have selected the proper person for the project manager role, it is time to deal with an extremely important topic. Most projects fail within the first five minutes of their existence because most project managers accept the executive’s direction at face value. When a project is assigned to the project manager with the command that it must be done by June 15 for a cost of $100,000, the project manager likely accepts the instruction and moves on. Project managers think that because the executive said it, the budget is fixed and the date is fixed. While sometimes this may be true, it should be the exception, not the rule.
Most of these misperceptions can be corrected with a simple statement. That statement is, “Let me know as soon as possible whether you think this can be done by June 15 for $100,000, and if not, tell me what our options are.” This statement will communicate that the deliverables are what is desired, but the organization is open to flexibility for the right reason. If the statement is not made, then many times the project is doomed to fail. Let me share an example.
A client of mine was implementing a new platform solution for all of the employees. When the project was assigned, the CEO stated that the company wanted it completed by the end of the year. Everybody nodded their heads, did not say another word and then started working on the project. This client had immature planning processes, and the project team felt that it did not have time to plan the project and should just get going. The project manager selected was one of the CEO’s favorite managers. The CEO thought that she would be fantastic to lead the effort.
Fast forward nine months. The project was not going well. The project manager was afraid to tell the CEO the current progress because she thought that she could turn the project around in time. The project team members were disjointed and demoralized because they thought they were working twice as hard but did not seem to be making any progress. Almost every person on the project team knew that the project would fail. However, that information was not making it back to the CEO.
Since the CEO had heard that the project was going well, at the end of September he told stockholders the plans for the new platform and said it would be live at the end of December. Now the company was committed. In order to make the date, the team agreed that it would roll out the new platform Dec. 31 with the instructions, “Please do not use this software yet.” This way the team could say to the CEO that the project went live in the time frame promised.
When I surveyed the project team members, I asked them if they thought that this result is really what the CEO wanted. Astoundingly, almost all of them said it was. A couple of them said that they were pretty sure the CEO wanted it to work, but if he said Dec. 31, he means Dec. 31. Obviously, this is not what the CEO wanted. There was a crucial moment that this did become a project that needed to hit a time frame to save face. That moment was at the stockholder meeting in September. The team knew the project was doomed to fail long before then, but the CEO was left in the dark.
This story illustrates many misconceptions that occur in project management. First, the selection for the project manager was not the right call. She was a fantastic manager of a department, but did not have the skills to manage people outside of her direct influence. Second, the dates were mandated to a point, but no options at any time were given to the CEO for decisions. Third, the project manager and team failed to give the proper status updates to the CEO. Finally, team members were heaving a “Hail Mary” on every play hoping to score when they needed to have a more methodical game plan. The unfortunate part of this story is that it occurs in almost every major company.
To bring this story back to the value of project management, many times we do not see the value because all we are asking project managers to do is execute poor decisions. They do not have the ability to select or influence the date, budget or requirements of the project. Many times they do not have the skill set to understand what they are missing, and often they are the wrong person for the job. Then the company looks at the project manager and the missed result and states that there is no value in project management. This practice is one that must change in order for businesses to realize real, attainable results.
Dictionary.com states that an actuary is “a person who computes premium rates, dividends, risks, etc., according to probabilities based on statistical records.”
Actuaries are key individuals who make sure that the premiums will outweigh costs of the insurance to make insurance companies profitable. In a way, they are legalized gamblers. They analyze tons of statistical data, probabilities and formulas to determine the cost of insurance to the insured. There is no way that an executive gives a new insurance product over to an actuary and states, “Just throw me a number; I won’t hold you to it.” Why? Because there is a process that must take place to make sure that the recommendation is accurate. Since the rate chosen determines how attractive the insurance is and how profitable the margins are for the company, this is certainly a decision that should not be rushed. The executive can influence where the targets should be, such as by saying, “We would like the premiums for this product to be between X and Y dollars.” The actuary then can let the executive know how likely that is. Based on how close they come to what was requested and what is possible, they may adjust the product, cancel the product or go forward.
This same behavior needs to apply to projects. The executive can state that the project should be done by June 15 for $100,000. The project manager then can tell the executive, after the analysis period, how likely that result is. Then the executive and project manager can look over the alternatives and make the best decision.
Will this stop all projects from failing? Absolutely not.
But it will bring proper context to projects. Picking a date and a budget, just like an actuary, is an educated guess, one that is done through a process, education and analysis. However, it is still a guess. An actuary can say that people in certain age groups with certain heights, weights and medical conditions are likely to die between this age and that age. They are unable to guarantee that someone will die within that range. It is simply their best guess as to the range that the person is likely to die. This is the same for projects. We can say that there is a likelihood that the project will be complete during this time or for this budget, but it is not a guarantee.
If you are looking for a guarantee or an ability to deal with risk, such as a regulatory mandate or something that must be done by a certain date, then we can address those concerns. For instance, the insurance industry uses a term that it calls “riders.” This addition to the policy covers riskier events. In the case of projects, you can utilize contracts and vendors and fixed price or performance bonds to ensure that the project is more likely to fall in your favor.
The real way to make sure that projects are successful is to follow a few simple rules:
As difficult as projects may be, they can be successful. You can win at this game. Your team can fire on all cylinders and truly deliver the value that you know is achievable. I often joke that the reasons projects fail have not changed since 1969 when they started being tracked as metrics for the Project Management Institute. The way to keep projects from failing also has not changed since 1969; we just refuse to do things the right way.
It is pure insanity that most companies feel that they can take a broad stroke at a project and then feel that the date and budget can be mandated. It’s important to challenge a team to do its best or set the bar high to deliver the best results; it just needs to be done with the context that selecting a date and budget are estimates. If they were guarantees, and I was that successful in pulling off the impossible, then maybe I should have become a stockbroker. Then this article would have been written from the Italian countryside. For now, we must introduce the contextual items of estimation. When those concepts are embraced as an organization, then companies truly will find the value of project management.
Rick Morris owns R2 Consulting LLC and has worked for organizations such as GE, Xerox and CA. He has consulted for numerous clients in a wide variety of industries, including financial services, entertainment, construction, nonprofit, hospitality, pharmaceutical, retail and manufacturing. He is a public speaker and creator of a nonprofit foundation to promote project management in charities and other nonprofits. Morris has two books, Project Management That Works! and The Everything Project Management Book, Second Edition.