Thursday, January 15, 2015

The Cost of Working Without Trust



photo in public domain

This month’s story, the first of a two-part series about working with and without trust, is about a manufacturing plant in a well-known consumer goods corporation.
     Three years ago we began a “grass-roots” plan to expand production capacity for a successful product. The project started in a wheat field and was to end two years later with a multi-million dollar plant. Unfortunately, the eventual plant cost became a troublesome issue in an otherwise successful project.
Management blind to the facts  
     To begin with, upper management believed the project should cost $40 million, a figure based solely on their own experience and not on the facts. Management declared the conceptual study’s estimate of $55 million to be unacceptable because it had already agreed to staff and develop a conceptual study based on their $40 million figure. They questioned the cost engineer's credibility, even though he was quite experienced and used proven methods to develop the estimate. There were even discussions that the scope and estimate were “gold-plated” and that we really wouldn’t build the plant like that. After reducing the project scope to appease management (reduced building size, eliminated some non-process scope, etc.), a compromise estimate of $50 million was accepted for the project's appropriation.
     Immediately after appropriation, the eliminated scope was returned to the project because the scope reduction decisions had been based on cost criteria alone, with no consideration for the actual needs of the project. For example, reducing the building size meant a key piece of production machinery would no longer fit, so the building had to be returned to its original dimensions. Despite valid scope additions such as this, management refused to approve changes. They said, “You already have $10 million more than you need. We're not going to give you any more fat!”
Given management’s attitude, the project team maintained very little cost consciousness. Since management was ignoring valid cost estimating and trending data, the team didn't bother with cost control and the cost situation soon became disruptive. The project team knew they were exceeding the appropriated amount, but since management refused to listen to the team's concerns, cost control became a big joke.
     So the scope grew while the cost predictions remained the same. When the project team completed definition and design, a second estimate was published at $58 million.  When construction took over, the estimated cost of the plant increased to $64 million (the amount the contractors originally estimated for the project). Even the most dedicated effort of a competent project team cannot deliver a successful project without the trust and support of upper management. Trust is a two-way street:  the trust of senior managers in the project team facilitates the trust of the team in the senior leadership.
     At project close, the project team had done an excellent job of building a $64-million plant. The start-up was on time and one of the best in the company. The only criterion the project failed to meet was cost, due to management's stubborn arrogance and unbending devotion to its own target cost. Unreasonable pressure from management to pursue unrealistic objectives does not ensure the achievement of those objectives.
     When it comes to organizational performance it is a balancing act to challenge people to achieve high performance. Set the bar too low and it only calls for minimal effort to reach. However, if the bar is set too high, with unrealistic objectives, failure is the assured outcome. And what was upper management’s response to the outcome in this story? The contractors were hung.
Part 2 of this two-part series will be published next month, with a story about working with trust.

Wednesday, December 17, 2014

Pragmatism Does Not Mean Being Unprincipled



In the last blog we stressed the importance of judgment for successful project management. Robert Goehle, from the US Department of Energy (DOE), had to resort to judgment when attempting to adhere to one of the key principles of project management: Strive to meet the customer’s needs!1
Good project managers understand that it is important to involve the customer in the project deeply. Involvement can mean many things, but generally requires the project manager to listen to and be responsive to the customer’s needs.
Listening and responsiveness do not mean always accepting the customer’s point of view. Following are two examples in which customers were deeply involved in the projects, but the extent to which their initial demands were met differed considerably.
A Research Facility with Only One Line In
One project entailed the design and building of a facility for ecological research and was operated by a local university (the customer) at a site operated by the DOE. The facility would house a veterinary-type clinic for observation, surgery and autopsy of small animals. As most of the researchers using the facility would have offices elsewhere, the customer required only a single telephone line for the entire facility.
The DOE site manager decided that the facility must comply with DOE standards, and this included multiple phone lines, fiber optics, computer capability, and a fire notification system. These applied to all new facilities constructed no matter what their functions.
The customer was furious when informed of this because these requirements were going to add substantial cost to the project, and the customer had a limited budget. At that point the customer proposed doing away with all the communication lines to the facility, settling for a cellular phone. The DOE site manager still found this idea unacceptable; all facilities located on site must be on the site system.
It was a delicate situation for the DOE project manager, whose job was to provide oversight of the project and serve as the go-between for the customer and the DOE site manager. Despite the site manager’s requirements, the project manager was convinced that the customer was right. Under these unique circumstances, the Project Manager believed the DOE standard was inappropriate. The site manager, however, was adamant about his requirements. Thus, the Project Manager decided to take the case to DOE headquarters and argue on behalf of the customer.
In this case, a waiver was granted. The facility was constructed with a single phone line, and the project was completed within budget.
A Testing Facility for Multiple Customers
In the second project, led by the same Project Manager, the mission was to design and build a facility to test products for five different customers. The new facility was to provide environmental test chambers that could quickly raise and lower temperatures. Each customer had completely different temperature requirements for the products to be tested. This meant that the facility had to provide multiple ovens or additional environmental chambers to satisfy all the different requirements. The result was that the total estimated cost of the facility was much higher than the approved budget.
The Project Manager approached the customers separately and tried to get them to relax their requirements so that the project would be able to meet its budget. The customers listened to him, but were clear that they could not compromise on their requirements. While the Project Manager wanted to satisfy his customers, he realized that unless he found a way to get them to relax their requirements they would all wind up with nothing. Therefore, he decided to approach them one more time to ask them to relax their requirements, but this time he approached them as a group.
Each customer was provided with the temperature ranges required by the other four. They all were requested to adjust their requirements to the next closest set of requirements. At first, there was resistance to changing anything. Each customer felt that the requirements could not be changed. But once they realized that unless they collaborated, none of them would get anything, they worked together to streamline their requirements so the project could succeed. By combining requirements, they reduced by half the number of ovens and environmental test chambers. In the case of special needs, small units would be purchased at a greatly reduced cost. Since fewer units were needed, the size of the facility was likewise reduced.
In both examples the project manager fully engaged and worked with the customers and met budget constraints. However, in the first case he was willing to confront authorities to meet the customer’s requirements, while in the second case he confronted the customers and convinced them to modify their requirements.
These two examples demonstrate that when it comes to meeting customer needs, context and customer engagement are key. John Russell, former vice president of Harley-Davidson Europe, put it this way: “The more you engage with customers the clearer things become and the easier it is to determine what you should be doing.”
In his book Six Action Shoes, Edward de Bono relates pragmatism to context-sensitivity. “Some people condemn pragmatism because they believe that pragmatism seems to be a way of acting without principles. Pragmatism does not mean being unprincipled: it means the pragmatic use of principles. Pragmatism is when you do what can be done to achieve an objective and put as much emphasis on practicality as on principles… Pragmatism means being sensitive to the situation...”2
1 Laufer, A. & Hoffman, E. J. (2000). Project management success stories: Lessons of project leaders. New York, NY: Wiley, 149-151
2 de Bono, E. (1991). Six action shoes. New York, NY: Harper Business, 67-8.

Tuesday, November 11, 2014

Avoid the most expensive words in business when it comes to project management



“That’s the way we’ve always done it” may well be the most expensive words in business. While it’s important to build on past success, every organization must remain open to new ideas and accepting of change in today’s rapidly evolving environment.
image by Gwydion M. Williams
free use via CreativeCommons
There is no doubt that current practices affect all other practices. And they should. However, successful project managers deviate from the common “one best way” approach and adjust their actions to the context of the project. Avoiding the “one best way” approach does not imply that there are no “wrong ways,” that “anything goes,” or that you must always “start from scratch.” The best approach is to strike a balance that relies on accumulated organizational knowledge while fostering flexibility and creativity among all those involved.
Most successful project managers understand that context is king, and thus, they spend much time adjusting their practices to the context of the project. At the same time, however, in projects sharing common characteristics and challenges, project managers used many practices in a like manner.
Compare, for example, the use of procedures in a product development project with their use in a repeated tasks project.
New product development: The Joint Air-to-Surface Standoff Missile (JASSM) program was established to replace the cancelled Tri-Service Standoff Attack Missile program, which had exceeded its budget estimates by record levels. The US Air Force told the contractor, Lockheed Martin: “We don’t have the time, we don’t have the funds, and we don’t have the answers. We want a missile in half the time for half the price.” Thus, it became clear quickly that the only way to produce an affordable missile was to stop doing ‘business as usual’.
Repeated and risky tasks: The Environmental Research Aircraft and Sensor Technology program, established by NASA, was charged with converting Unmanned Aerial Vehicles (UAVs) into research platforms. The know-how required to overcome and manage risk put most companies off. AeroVironment, one company that was brave enough to embark on the adventure with NASA, found that it faced a daunting technological challenge: to operate an aircraft that was light enough to fly and large enough to be powered by the sun and carry meaningful payloads.1 
In the JASSM project, Larry Lawson, the project manager for Lockheed Martin, was instructed to throw out all the military standards and was given the freedom to devise his own approach as long as it met the project’s three key performance parameters. In sharp contrast, the team at the Pathfinder project was expected to strictly adhere to the extremely detailed flight procedures. Moreover, there was even an extremely rigorous process for preparing and refining these flight procedures.
The call for judgment
The classical model of project management, in which standards are developed for virtually all situations, expects the project manager to serve primarily as a controller: to ensure that team members adhere to the established standard. This role entails only a minimal requirement for judgment and no requirement for adaptation. In reality, the project manager must constantly engage in making sense of the ambiguous and changing situation, as well as adjusting common practices to the situation.
This process requires a great deal of interpretation and judgment based on rich experience.
Quinn, Mintzberg, and James concluded that judgment is the most indispensable attribute of managers: “It is simply our conclusion that among all other attributes of managers, the most indispensable is judgment because it is the integrator which guides and controls all the others… most judgment calls are not simple selections between black and white, but are between subtle shades of gray… Don’t expect everything to work out well the first time…Don’t be afraid to make mistakes as long as you learn from them.”2
The judgment needed in specific context situations cannot depend on the use of general rules and therefore cannot be developed solely on the basis of reading books or participating in training seminars. Rather, it requires extensive experience. Stories, like those presented here, which present a variety of contexts and solutions, are an excellent source for enriching your experience base.
1. Laufer, A. (2012). Mastering the Leadership Role in Project Management: Practices that Deliver Remarkable Results. Upper Saddle River, NJ:  FT Press.

2. Quinn, J., Mintzberg H., and James, R. (1988).  The Strategy Process: Concepts, Contexts, and Cases.  Englewood Cliffs, NJ: Prentice Hall, xi, 956-60.


Monday, October 13, 2014

The Flies and the Bees: Tailoring Project Processes to Project Context


Peter Drucker argued that since the study of management began in the 1930s, several assumptions regarding the realities of management must be unlearned. One of these assumptions is that: “there is (or there must be) ONE right way to manage people.” Drucker further noted: “In no other area are the basic traditional assumptions held as firmly—though mostly subconsciously—as in respect to people and their management.” More importantly, “In no other area are they so totally at odds with reality and so totally counterproductive.”[i]
The following experiment demonstrates one possible “counterproductive” consequence of clinging to the “one best way” when at odds with reality:    

If you place in a bottle half a dozen bees and the same number of flies, and lay the bottle horizontally, with its base (the closed end) to the window, you will find that the bees will persist, till they die of exhaustion or hunger, in their endeavor to discover an opening through the glass; while the flies, in less than two minutes, will all have sallied forth through the neck on the opposite side.…  It is the bees’ love of light, it is their very intelligence, that is their undoing in this experiment. They evidently imagine that the issue from every prison must be where the light shines clearest; and they act in accordance, and persist in too-logical action. To bees, glass is a supernatural mystery.… And, the greater their intelligence, the more inadmissible, more incomprehensible, will the strange obstacle appear. Whereas the featherbrained flies, careless of logic… flutter wildly hither and thither, and meeting here the good fortune that often waits on the simple… necessarily end up by discovering the friendly opening that restores their liberty to them. [ii]

Indeed, the “featherbrained” team that employs a random search (like the flies) may perform better in a dynamic environment than the “too-systematic team,” which completely lacks sensitivity to variations in project context (like the bees). The challenge is to transform the “too-systematic team” and render it context-sensitive, that is, a team which applies expediently proven principles, practices, and processes as general instructions that must be tailored to each unique context of the project (e.g., project size, stability of objectives, speed, task complexity, organizational culture, extent of top management support, and team members’ experience and skills).

Following is a brief example of how the different contexts of two information technology projects affect the working culture and work processes. The first project involves the development of control software for an airplane. The proper behavior in this case is highly technical. FAA regulations must be followed. Anything you do — or don’t do — would be evidence in a lawsuit 20 years from now. The development staff shares an engineering culture that values caution, precision, repeatability, and double-checking everyone’s work. In contrast, the development of a word processor that is to be used over the web requires a different approach. “Correct behavior” is whatever woos a vast and inarticulate audience of Microsoft Word users over to your software. There are no regulatory requirements that matter (other than those governing public stock offerings). Time to market matters — 20 months from now, it will all be over, for good or ill.[iii]
Unfortunately, the prevailing project management paradigm still advocates context-free processes and practices, rather than tailoring them to the unique context of the project.  Thus, the emphasis in most projects is still placed on the “standard” or the “common” rather than on the “unique.” Melgrati and Damiani eloquently make this point: “Project management ideology is paradoxical because it focuses on repetitive aspects and ‘marginalizes’ the uniqueness and originality that should instead characterize the project.”[iv]


[i] P.F. Drucker. 1999. Management Challenges for the 21st Century. New York, NY: Harper Collins, 9, 16.  
[ii] T. Peters and R.H. Waterman. 1982. In Search of Excellence: Lessons from America’s Best-Run Companies. New York, NY: Harper & Row, 108.
[iii]  The Seven Basic Principles of the Context-Driven School. 2007. Retrieved September 1, 2014, from http://www.context-driven-testing.com/
[iv]  A. Melgrati and M. Damiani. 2002. Rethinking the Project Management Framework: New Epistemology, New Insights. Proceedings of PMI Research Conference, Seattle: 371-80. A. Laufer. 2009. Breaking the Code of Project Management. New York, NY: Palgrave Macmillan, 97-100.