Holistic Decision Making

I was sitting in my Project Finance class (which is my next to last class before GWU will grant me my MSPM) and the topic of project selection came up. We reviewed NPV, IRR and other
methods. My issue is that, selecting a project based purely on financial returns seems highly flawed to me.

In a perfect world you could walk in with a list of 10 projects, show the ROI or NPV and then select the top 3. Done. Meeting ends and you go out and initiate them.

From my point of view this ideal world is an illusion. First and foremost, no decision is purely quantitative; there are many qualitative factors that need to be considered in project selection, such as:
- The politics of the organization
- The availability of resources
- The
impact of committing resources (similar to opportunity cost of money
committed)
- How is the project aligned with strategic objectives
- What are the risks of the project, is the organization adverse to those risks
- Does this help or hurt the stakeholders or customers (there are many projects that
could have a positive financial impact initially, but then anger your customers,
such as sending customer service to overseas call centers)

There are many more and I am not genius in pointing these out. In fact there are many methods to make a selection using both qualitative and quantitative values. I can recommended AHP, but there are others.

My point in bringing this up is that I think we, as PMs, need to push holistic approaches more often (or even all the time). Stats and financial models are nice, but they never show the whole picture. If you want to do your best to avoid things like unintended consequences, you need to be holistic in your decision making.

Fixed Work, I'm a convert

I am not going to pretend I have the pros and cons of Fix Work, Fixed Units and Fixed Duration down 100% of the time. That said, I do regularly try to determine which is best to use in my MS project plan. For a fantastic review of how each works in MS project please check out this:

http://www.pmconnection.com/modules.php?name=News&file=article&sid=52

Thank you pmconnections.com for the best review of this topic that I have seen!

So now that you have reviewed this and can consider yourself among the great schedulers of our day, you might wonder why I am excited about fixed work?

I work in an environment where I rarely know what resource commitments I will get and often can't estimate purely on the basis of how long a period of time will be required for a work package (for the cited resource issue and other issues). This leaves me with work.

Even in my constrained environment, I can get either the resources or a qualified stand in resources to help estimate the amount of work required to complete each work package. Once I create the work column and estimate the work, I can then create the duration I feel is likely (if I am forced to do this on my own) by assigning generic qualified resources and then playing with how much allocation % I think I will get from them. The duration is then recalculated, based on this. I can also then more the duration around (if required) which will recalculate my resource requirements.

I can also add in other factors, but no matter what, my original work estimates stay fixed and this seems to really limit the strange things that project sometimes likes to do.

So my advice is that if you are in an environment like mine, stop estimating duration and instead estimate work (and fix it).

Next Time: Is MS Project enough (or where is my Monte Carlo Sim)?

The Old Resource Switch Trick

I want to start this posting by saying: a) I don’t think vendors are evil b) I don’t think my simple tools are better then MS Project or other Professional ones

I have been on a number of projects, where during the sales process, followed by all efforts to estimate, my vendor will suddenly re-assign the fully qualified resource I have been working with to another project and give me someone ‘who is just as good’. I have also had this happen with internal departments, such as internal development groups. Either way, I consider this deceptive and a significant impact to the project schedule (and yes, I am assuming here the resource is not as qualified as the original). Why? Because vendors often use their more impressive resources to make the sale or get the project moving, but then require those resources to perform that same magic elsewhere.

Why assume that the newly assigned resource is not as good? Firstly, why would resource X be removed in the first place if resource Z is just as good? It is possible there is a legitimate reason, but mainly I think it is not the case. If you are working well and already trust that resource, it is in the vendor’s interest to keep the client happy. Secondly, the person now doing the work is no longer the person who made the estimates. That is always less desirable. To be fair, sometimes it is the customer (in this case myself or you as the PM) who requests a new resource. This could be because of quality issues (maybe you will get someone better), cultural issues (of the organizational kind) or something else. Regardless of who removes the original resource, your estimates and costs are now in question.
Here is a quick analysis tool I made in excel to help you size up the risk that was just created:

You have three questions to answer, per work package that is impacted by the resource change:
1. What is the qualification of the new resource (assume 100% for the original)?
2. What is the availability of the new resource (assume 100% for the original, unless you know otherwise)?
3. What is the rate of the new resource (again, I am assuming you knew the rate of the old resource)? Enter this information in the correct fields and you will now know your new duration and cost for that work package.

How it works:
Duration = (effort/qualification)/availability
Where effort is an hours value and both qualification and availability are % values

Cost= effort/qualification*rate
Where effort is an hours value, qualification is a % value and rate is a currency value You do need to know your original estimates as well.

You do this for two rows, row 1 is the original resource and row two is the new resource, this way you have a clear indication of the change if you don’t feel like computing the DELTA elsewhere.

Obviously you can do all of this in MS Project (and in more holistic way), but sometimes you need a quick and dirty picture that is easy for your stakeholders to grasp.
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Please email me for the calculator in excel format.

MS sins with Project 2007 but makes up for it with Viso 2007

I was disappointed to see that MS Project 2007 has removed the Visio WBS toolbar (as far as I can tell), because I am in the habit of exporting my task structure into Visio, via that toolbar, to create a nice graphical WBS.  I have no idea why MS thinks that upgrades require the removal of reports and features, but there is a silver lining here.

Checkout the Project visualization with the Microsoft Office Visio Professional 2007 WBS Modeler Add-in it lets you create an excellent WBS in Visio and send it out to project, becoming the basis of your new project plan file.  The tool is well developed and powerful, while being stable and simple to use.  It gets the Input/Output stamp of approval!

Happy 2009!

Worthwhile Reads

I like TechRepublic, here are a few links worth your time:

Project managers need more than PMP certification

I agree more or less with what is said here, though I think its true for most professionals. I especially feel that PM personal style is a huge question when hiring a PM. For instance, rigid, by the PMBOK PMs are not well suited to start up environments (which is not to say Start ups could not benefit from that sort of PMP). PMs who enjoy the meetings and interactions, but are soft on various project documenting and scheduling skills should stay away from more mature PM organizations (and maybe project management in general), especially if a PMO or security group/regime is in place

‘IT has no inherent value’

I will post my own review of this white paper soon. The Paper is from 2006 (I think) so I may include my thoughts on what has changed since then.

Five reasons to kill IT projects

I think every PM should always be ready to recommend killing their project if the reasons listed here (or other valid ones) come to be a reality. A PM should want the best project he or she can get and there is nothing wrong with wanting ones that make a name for them, but the interests of the company or client should come first. Conversely, PMs should not make a 'kill reason' a reality simply because they don't care for the project they are on.

START/FINISH and the Critical Path

Assuming you are using some kind of fairly standard Gantt program (I generally use MS Project, but have used Open Workbench from time to time) and assuming you subscribe to the Critical Path Method, I recommend you start thinking about your Gantt's network diagram in regards to START and FINISH activities.

Firstly, these will be dummy activities. Secondly, they are zero duration activities, there only to provide an anchor to the beginning and end of the network. All nodes in the network must have one or more predecessor activities, which can be other activities or START and all nodes in the network must have one or more successor activities, which can also be other activities or FINISH. The exceptions are that START only has successor links and FINISH only has predecessor links.

Why do this? A network with dead end paths is not a completed network. More importantly, if you have dead end paths then the critical path you have calculated (or the software is presenting) may not be the actual path and changes in the project schedule (as the project progresses and is managed) may not reflect changes to the critical path (again, assuming you are seeing the correct one in the first place).

90% of the project plans (gantts) I see in the workplace have this dead end problem and no one seems to use this START/FINISH dummy set. Why? Maybe a lot of PMs feel that if a path ends in the middle of the project it has no effect on the critical path. That might be true, but is far from an absolute.

I think my strongest argument for this is that its just good design. Linking all activities in an unbroken network creates a dynamic plan, where changes are instantly calculated across your entire network.

You could of course call START and FINISH something else if you prefer, such as the name of the final deliverable, but I prefer the generic names for the clarity they offer, and what is my final deliverable? the created deliverable or the post mortem?

Why Don't PMs Start Their Own Companies?

This question was posted on LinkedIn and it was interesting enough that I thought I would give my thoughts here. Obviously many PMs do start businesses. Some are people with dream and use their developed PM skills to execute on that dream. Others are professional PMs and become independent consultants or a group of consultants, who negociate direct contracts with companies.

I have spent most of my time in Corporate America and have only recently made the move to working for a consulting company. This is of course not my own business, but I do in fact have far more direct and meaningful influence over the company than I did at X corp.

All of this said, one reason I think PMs stay with companies is that the money is found there. I want to run large complex projects one day and large corporations have the kind of bankroll that those projects require. As well, my professors might disagree, but well developed methodolgies work best at more complex organizaitons (though they can be taliored anywhere) and it is corporations who might have the willingness to implement those methodologies (and the need).