Client management and climate change

January 17, 2014

Today I was thinking about the owner or client of the project that just seems unreasonable. I remember a project on a fixed bid contract where the client was convinced that the project was bid below cost and the profit will be made one change orders. This was not my project, but I remember the frustration of the project manager every time the client received a cost report. The client began every discussion with the statement of his assumption that the bid was too low and the project manager was trying to make up the cost through various ways.

Observing this project, I saw how difficult communication and the actual project execution was based on assumptions that were not true. No matter how much data, how many people concluded that the bid was a legitimate and cost appropriate bid, the client maintained confidence in his assumption.

Yesterday, an article in the New York Times reflected on the report that 2014 was the hottest year since record-keeping began in 1880. The article also included a refute from a scientist in the last paragraph of the article. The US Department of Defense, NASA, 255 members of the National Academy of Sciences, 11 Nobel laureates, the American meteorological Society, the American physical Society, the American geophysical Union, American Association for the events of science, United States Academy of Sciences, United Nations intergovernmental panel on climate change, are among the scientific organizations declaring, at a 99% confidence level,  that climate change will have a significant impact on human life on earth and the major factor influencing this climate change is the carbon-based economy.

With all the evidence pointed in one direction why it’s so easy to reject the evidence and draw different conclusions? Do we develop assumptions that become truths for us that make it difficult if not impossible for data and evidence to change? I can only conclude that sometimes we develop truths that are not based on solid appearance. I include myself in that category and only hope that my training and approach to life allows me to be open to ideas and cultures.

Sometimes, if we develop enough trust over time with our clients, we can develop a conversation that may allow us to challenge pre-existing assumptions were conclusions. This is extremely difficult, as you read in my prior posts, but it can be done. When you’re unable to develop this trust or present evidence in a way that the client can hear, sometimes you just manage the project best you can. This means you maintain the integrity of the project management processes and communicate with your client, providing the information the client needs to make good decisions. If the client chooses to interpret the information differently, just make sure you have the documentation.

I noticed that this post does not meet my typical standard for optimism and project management. I truly have an optimistic view of the people and our potential. I must admit, that when I see the conversation focus on challenging the evidence rather than developing a solution, I become increasingly worried. When scientists brought evidence that tobacco can be a major contribution to cancer, decision-makers refused initially to believe data; they took time to absorb the information and change their opinions. I’m beginning to believe we may not have the luxury of time on this issue. I’m beginning to believe we may not have the time on this issue.

I will be back to my positive self by my next blog.

Best

Russ

What You Should Know About Megaprojects and Why: an Overview, in the April/ May 2014 Project Management Journal

What You Should Know About Megaprojects and Why: an Overview, in the April/ May 2014 Project Management Journal

I just finished reading the lead article, What You Should Know About Megaprojects and Why: an Overview, in the April/ May 2014 Project Management Journal. This was an invited article from PMI written by Bent Flyvbjerg from Oxford University.

Flyvbjerg presented the current state of megaprojects providing an overview of the current market and trends, a general conclusion that there are a huge number of problems with megaprojects, the source of these problems in a couple recommendations. A historical analysis of the development of your project was very interesting and included a number of statements that needed backup. For example, he said: “when projects of such as go wrong entire company’s national economies suffer.” This may be a logical conclusion but in a research oriented journal I would say he would need to present data to back up his point. He also included the stimulus package that was passed by Congress in response to the banking crisis as a project and the major acquisitions program portfolio of the United States Department of Defense. By including these programs within his discussion of projects he has blurred his arguments.

Flyvbjerg been listed a number of megaprojects that went wrong; over cost, late, not meeting the specifications and leading to a negative ROI. The list of projects that that one or more these criteria for an underperforming project was impressive. One of the most valuable parts of the article for me was a list of challenges that are inherent in megaprojects and are not typically dealt with in planning and executing megaprojects. In paraphrasing these challenges list included:

1.      megaprojects are risky

2.      planners and managers don’t have the appropriate skills

3.      stakeholders have conflicting interests

4.      technology is typically new and untested

5.      overcommitment to project without justifiable data

6.      optimism bias

7.      significant changes over time

8.      ignoring events that could cause risk for the project

9.      inadequate contingency

10.  misinformation about cost, schedule, benefits, and risk

Although I believe this list has a lot of validity, it would’ve been helpful to have some data that supported the belief. In a later section we also indicated that “front in planning this scant and bad projects are not stopped”. These types of conclusions cry out for citations.

Flyvbjerg quoted from the Standish Group research about the number of failed projects and I believe this detracted from his argument because of the flaws in this research that has been pointed out.

One of the more interesting parts of the paper was the discussion of the Hirschman’s Hiding Hand. In short, this is the intentional underestimate of a project in order to get approval. Flyvbjerg presented several situations where the original estimate of the project was intentionally at the level to be approved with knowledge that the estimate was significantly lower than the anticipated actual cost. In the construction industry recalled this “lowballing” an estimate. Companies would bid on projects at or below cost with the knowledge that there would be sufficient changes that could be created that will enable the company to make a profit. The art was estimating how you could go and how many changes could you create to have a successful project. I watch the original estimates for the new nuclear power plant proposal that went to the utilities commission in South Carolina. With my limited experience in this industry I estimated the cost to be at least double what was submitted to the utility commission. After initial approval, every update provided to the utility commission included at least a 10 to 15% increase in the estimate. I find it difficult to believe that the people making the estimate and probably the people accepting the estimate and making approval did not know that the true cost will probably be double.

Flyvbjerg suggested that there are number of drivers that lead to these intentional underestimates. He also recommended that companies and governments establish significant consequences for anyone or any organization that intentionally provides misinformation in these processes. He also gave several examples where countries are taking a step including the United Kingdom, Switzerland and Australia. It also appears that many private organizations are relying more on consultants to evaluate project bids more closely. Flyvbjerg suggest that we cannot solve problems that we do not talk about and cited Pres. Obama’s identification of costly overruns, fraud and abuse, and endless excuses as key policy problems, is one indication of a lease beginning to talk about these issues.

As I’ve addressed in other post, I believe this is indicative of where we are in the project management profession in the issues addressed in this article are not exclusively related to megaprojects. One of my focuses the best several years has been to better understand our projects. I believe the tools and techniques for developing a good understanding of the project are not well developed and without a good understanding of the project it is difficult to develop an appropriate execution approach. See my other post on project profiling.

One of the things I’ve discussed in earlier posts has been the breaking up of large projects into smaller components. Most organizations have a project size and complexity comfort zone and when the project gets too far out of that zone is important to break the project down into smaller projects that can be managed independently and coordinated from a program point of view. This approach should have had some mention in Flyvbjerg’s article.

The article is worth reading and does provide a good overview of some of the issues surrounding megaprojects as well as some of our project execution as a whole. It is important to put on the table that much of this underestimating of project costs is intentional and that’s difficult for the project manager to address and project execution.

Russ

Project Management Defined

A discussion of the definition of project management from some of my earlier works might be a useful foundation for some of the blogs I intend to provide over the next couple months. I hope you enjoy and participate in this process.

Russ

“Project management is the application of knowledge, skills, tools, and techniques to project activities to meet the project requirements” (Project Management Institute, Inc. p. 2013). This simple definition represents a compromise that resulted from intense discussions within the Project Management Institute (PMI) during the 1980’s. One of the priorities of PMI during this time was the development of project management as a profession. Although debate continues on whether project management is a profession with an enforceable code of conduct and other traditional criteria for recognition as a profession, the development of the Project Management Body of Knowledge and the project management certification that derived from these efforts, helped promote the understanding and development of the project management field.

The discussion about what should be included in the definition of project management included debates about the purpose of project management. Is the main purpose to meet client’s expectations or is the main purpose to meet the written specifications and requirements? This discussion around meeting project requirements was not easily settled. If it is assumed that the project client is the one that defines project requirements, then maybe project management is the application of knowledge, skills, tools, and techniques to meet client requirements or client expectations. PMI’s definition of project management does provide a good understanding of project management but it does not help us understand project success. For that, we must include the client.

Meredith and Mantel (2000) discussed project management in terms of producing project outcomes within the three objectives of cost, schedule, and specifications. Project managers are then expected to develop and execute a project plan that meets cost, schedule, and specification parameters. According to this view, project management is the application of everything a project manager does to meet these parameters. This approach to defining project management shares PMI’s focus on the project outcomes in terms of requirements.

Meredith and Mantel added a fourth aspect of project management—the expectations of the client. One client-centered definition of project management is the application of knowledge, skills, tools, and techniques to meet or exceed the expectations of the client. This definition focuses on delivering a product or service to the client that meets expectations rather than project specifications. It is possible to meet all project specifications and not meet client expectations or fail to meet one of more specifications and still meet or exceed a client’s expectation. 

Meredith and Mantel discussed a tendency noted by Darnall ( 2007) that expectations often increase during the life of a project. Meredith and Mantel suggest that this is a form of scope increase. A project scope is a carefully crafted document that reflects the performance specifications of the project deliverables. Defining the project scope and managing scope change is a very different process than developing an understanding of a client’s expectations and managing those expectations. Darnall focused on defining and managing client expectations as a critical project management skill that is distinct from scope development and management.

Client expectations encompass an emotional component that includes many client desires that are not easily captured within a specification document. Although closely correlated with project specifications, client expectations are driven by different needs. It is possible for a project team to exceed every project specification and the project end up with an unsatisfied client. 

Sustainability in Project Management

I had a dialog with my project management sustainability class and I provided the following and thought it might be of interest.

We are looking at sustainability from TWO perspectives in our program. Although sustainability refers to the long term viability in both uses of the term sustainability, two different concerns have emerged and we are addressing both of these concerns in our courses.

1. Project Management/ Stakeholder Management

I was on a PMI committee in the 1980s that was developing what became the 1st edition of the PMBOK. This was a revision of the all the earlier work into one document. I wrote a definition of project management that focused on the satisfaction of the client. The debate at the time was where project success was defined by meeting project specifications (time, cost, quality) or by client satisfaction. Project management at that time was dominated by the engineering profession and focused more on meeting specification. Today, the focused is more on meeting client satisfaction.

For a project to be deemed successful the deliverable of the project MUST meet more than the specifications and meet the long term business need that created the need for the project. This focus on the long term business need is called sustainability although you will not find this word in the glossary of index of the PMBOK. What you will find is a greater emphasis on meeting client long term goals or business goals. especially in the newest edition of the PMBOK. This is the emphasis discussed by our authors (Goleman, Pinto... ) in portfolio management.

2. Sustainability/ saving the planet

A second use of the word sustainability focuses on sustaining the earth. There is a general consensus among scientist (environmental, physicists, climatologist, anthropologist, social scientist, etc) that the carbon based economy and population growth will place so much stress on the earth's ecology that the earth will not be able to regenerate and that changes will occur in the earth's environment that will make human habitation difficult and maybe impossible.

Governments, social institutions and economic entities are all developing the means and methods to operate effectively while reducing their carbon footprint. http://www.carbontrust.com/client-services/footprinting/footprint-measurement

Each of these entities are investing in projects to reduce carbon impact on the environment and human life. Project managers must understand the business drivers of their project sponsor. Although governments, social entities (such as the Rocky Mountain Institute) and economic entities may have different motivations for focusing on sustainability, the project manager must discern and manage the project to maximize the project sponsor’s needs.

This also means we are ethically obligated to manage our projects to meet our client’s business needs and to manage the project in such a way as to minimize the project’s carbon footprint both in the lifespan or the project and the lifespan of the organization.
I am interested in your thoughts.

Russ

The Honest Truth

The Honest Truth (artilce from PMNET)

I received my March PMNET, PMI’s magazine for project managers. I was attracted to a piece on managing stakeholder relations by Shelinea Somani with a subheading “Do the benefits of open dialog with stakeholders outweigh the risks”?

The simple answer is “of course” and Somani gave an example where the answer applies and, of course, everything turned out for the better. I have known many of project mangers that often shielded important stakeholder from important information. Most of the time it was because the project was slipping, either in cost or schedule and the project manager had every confidence that they had the ability to make up the deficit before anyone would know and just as often they were wrong. The result was a project over cost or behind schedule and a client who had lost trust and confidence in the project manager. On occasion I saw project manager replaced.

Other situations can be more difficult. You have agreed to give an employee who is an alcoholic a second chance after being removed from their previous project for drinking. You discovered that critical material for your project will be late because the supplier has prioritized another project for your company. You agreed that you would be at the remote job site for a month nine months from now and just found out your wife is expecting at the same time. Do you tell your client?

My default position is yes, you tell your client. Trust is one of the most your important assets. Without the trust of your client, your team and your management communication will become very difficult if not impossible. There are always exceptions but those exceptions should always be rare and the kind of exception that is found out, your client would understand.

This is one of those topics that deserves some thought and some real dialog with more difficult choices in the PMNET would have been helpful.