PM in Practice

by
Senior Project Manager at Eagle Technology, APMG Accredited ITIL, MSP + PRINCE2 Practitioner, governance expert, cricket fanatic, squash pretender. Opinions expressed are purely from my experience of leading teams and running projects, and in no way claims to represent those of my employers or customers.

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What can accounting and finance teach project and program management?

Do managers need technical background

Can you get the right reaction with the occasional verbal spray?

Friday rant ... inventing process for finance / HR

October 21, 2013 04:23 AM

What can accounting and finance teach project and program management?
Categories: Accounting, Finance, Lessons learned

http://prince2pm.files.wordpress.com/2014/05/what-can-accounting-and-finance-teach-us-about-project-program-managementNearly two decades ago I took one accounting paper and did just enough studying to pass it. I was studying for an IT degree at the time and only did the paper as it was a compulsory one. Wheels have now turned enough for me to come back to doing an MBA and by coincidence, starting back with accounting as my first paper. Today though my attitude is different. I can see use of quite a few accounting principles in managing projects, programs and portfolios – be it the IT domain or any other.

Reposted from my blog Project, Program and Portfolio Management in Practice.

What is a project?

Neither of the two main project management bodies have very similar definitions of project.

… a temporary organization that is created for the purpose of delivering one or more business products according to an agreed business case – PRINCE2

… temporary in that it has defined beginning and end in time, defined scope and resources … unique that it is not a routine operation – PMI

What is the shortcoming in both definitions? Both are approaching the project from the point of view of those that are charged to deliver the outputs. Project teams do not undertake projects because they think it is a good idea. Where is the customer in all of this? It can be argued that the mention of the business case in the PRINCE2 definition means it now represents what the customer gets out of it. None of these are as clear as the accounting definition of project

an investment that increases the wealth of the owners.

You can define the terms owner and wealth to what is appropriate in your context. But this definition is the most focused one that I have found anywhere. If anyone was unclear as to the outcome they should be delivering, this leaves no room for doubt.

Is this project/program worth investing in?

Business cases for projects contain all manner of justifications. Accounting and finance provide the mechanisms for relative comparison. Whether justification is based on additional cashflows, reduced expenditure, or increased efficiency accounting provides mechanisms to objectively compare them. Key strength of accounting is it takes into account the time value of money too. A dollar earned today is much more valuable than a dollar earned sometime in future. The concept of Net Present Value (NPV) provides a way to compare cashflows that are invaluable tools for such comparison. Accounting also has very clear formulas to calculate break even points given different amounts of fixed and variable costs. Many business cases fail to address these fundamentals. It should be mandatory for those involved in preparing and evaluating business cases to have understanding of these concepts.

How is it going?

Accounting is full of metrics. Whether you are measuring efficiency, turnover, income, cash conversion cycle (how long before you lay money out for raw materials to when you get paid for it), what a share or bond should be worth etc. The closest project management comes in a traditional sense is earned value management (EVM) and more recently the burn down charts in some of the agile practices. Some service management organizations are better at it. They do measure mean time to failure and restore among other operational metrics. Singular focus on analysis and improvement on these is something project management can learn from.

How do I report?

I have seen and prepared all manner of project reports. If I don’t see another Red Amber Green report, I don’t think my life will miss much. While these reports are useful in getting our eyes focus on likely areas of problems they are pretty useless in contextualizing what the problem is. This is where accounting leads just about any profession. Generally accepted accounting principles (GAAP) mandates interpretations of exactly how reporting is undertaken. I am somewhat generalizing to make a point about standardization of reporting.

Does that mean accounting and finance have it all over project management? Not quite. The two are totally different disciplines. You can equally play the accounting system as the likes of Enron, Fanny Mae and Freddy Mac would attest to. The key is to take the strengths of other professions and make ours even stronger. As I go through some other papers I feel there may be a few more posts coming titled what can ” ” teach …

What parallels with other professions can you see?

Image credit: lewisaccountingandtaxservice.com

Posted on: May 30, 2014 12:43 AM | Permalink | Comments (0)

Do managers need technical background
Categories: Leadership, Stakeholder

Couple of years ago I wrote a post on whether managers needed technical background to be successful. That article had a specific focus on project management. I have recently been thinking about the same topic on a slightly different context.

Re-posted from my blog Project Management in Practice.

I recently embarked on an Executive MBA. The first paper I’m taking for the course is Accounting. The aim of the paper is not to turn managers into accountants, but to enable them to make sense of accounts, the information these give and what can be used to make management decisions. My study group contains an executive from local government, a consultant that works with ministers and mayors, a statistical analyst from a government department. I manage part of an IT professional services consultancy. We all seem to have forged successful careers which require interpretation and forecasting of financial information without being accountants. So I wondered important is domain knowledge really?

You can argue that we have taken up MBA precisely because we may have realised there is a gap in our expertise. There is an element of truth to that. Let’s explore this further. Most professional careers will require you to have some sort of qualification. Whoever is the team leader in that setting is one that is appointed on the basis of their experience and/or expertise in that area. It can be helpful in the next step up to managing business units as well. Once you get to group / divisional level usually domain knowledge is less helpful. You require expertise in other areas of business to be successful. Executives in your business may have little or no knowledge of the particular domain area, but they will usually bring significant strategy and business knowledge.

There are different skills required in different areas of management. Can you effectively devise strategy if you had no domain knowledge of the business. The answer is no. This is where senior managers use domain expertise to bounce ideas off, find what is feasible and risks and rewards of various approaches. Senior managers are judged by their ability to understand the totality of a business and impact of choices that get best outcome for the enterprise.

This need to get away from the details at certain levels is why many brilliant technical staff do not necessarily make great managers. Those that wish to move up the chain will at some point have to give up their control of specific areas they look after (be it engineering, software development, teaching) and trust others to provide the expertise and spend the time understanding the business as a whole. This is not an easy thing to let go of.

So my conclusion today is slightly modified from the one I had made a couple of years ago. Managers with domain knowledge is only useful up to a certain level in the organisation.

Do-managers-need-technical-background

Photo image credit: elandcables.com

Posted on: March 15, 2014 01:09 AM | Permalink | Comments (0)

Can you get the right reaction with the occasional verbal spray?
Categories: Behavior, Leadership, People

I was reading an article in the Harvard Business Review regarding the appropriateness of yelling at employees. It was quite an interesting article in which Michael Schrage gives examples as Steve JobsBill GatesSir Alex FergusonVince LombardiArturo Toscanini in various professions as those not averse to a bit of verbal spray. He makes an interesting point that while yelling does not make one a better manager, at the same time it does not necessarily indicate managerial weakness or failure of leadership.

Re-published from my blog Project Management in Practice.

Can-you-get-the-right-reaction-from-the-occassional-verbal-spray

Scharge seems to have taken quite a hammering if you read some of the comments on the article. However, I am sure he was playing the devils advocate and wrote the piece precisely to get this reaction. Indeed in some cases managers or leaders get away with the occasional hair dryer treatment. Let us have a think about what it is that their employees are letting them get away with and why. I will use some of the gentlemen mentioned in this very article.

The likes of Steve Jobs and Bill Gates built or ran organisations that generated a lot of wealth within its employee ranks. These are also organisations that employ some leading minds and have made a lot of employees rich through stock options. People work in these organisations for various reasons. Some are after the intellectual fulfillment, others for monetary reward, some purely to enhance their resume. Same is true for the likes of Ferguson and Lombardi. Players play for their teams for a mixture of lure of winning trophies, play with other great players, the salary or adulation from the fans.

For every Gates and Jobs there are multiple Kevin Rudd, Mark Pincus. For every Ferguson and Lombardi there are many more Buck Shelfords. The Shelford example is quite striking. He was known as the hardest rugby player. He once played on despite against France despite an act of foul play resulting in his scrotum being split. Bring back Buck signs are still visible today from fans cherishing his demeanour. Yet, when he took to coaching, he relied on the same “hard man” persona and foul mouth. His teams were unmitigated disasters.

What does that tell us. It is not these leaders’ yelling at their charges that got the results. Instead it was their other attributes of vision, planning, development of individual capabilities and sense of pride in work that were the key contributors for their success. In my view their sometimes tempestuous behaviour actually got in the way to diminish their other qualities. There would be a level of tolerance for everyone. Exceeding those would lead to people abandoning even the most decorated leaders.

Most people are not the special ones mentioned here. If leaders are to take cues from these well known figures, they should instead concentrate on their other qualities. I have found even small things like acknowledging good efforts from individuals and thanking them for those goes a long way than anything else. I struggle to think if yelling would ever give me the same reaction. Everyone is different in how they react to volleys of verbal spray. You have to make sure you get the right reactions from people.

Yelling is a sign of control lost. More credibility you have built over time will dictate how soon your people abandon you as a result. Even if you find it works from time to time, don’t get too fond of it.

Image Credit: Daily Mail

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Posted on: December 08, 2013 08:17 PM | Permalink | Comments (0)

Friday rant ... inventing process for finance / HR
Categories: Agile, Behavior

I remember having to study Accounting 101 when I studied Information Systems. At the time I had wondered what the purpose of it was. The rationale given was that 80% of software is written either for or because of bean counters. More time goes by, I am seeing businesses becoming agile and learning new ways to deliver services faster and in a more competitive way.

Re-posted from my blog Project Management in Practice.

Sadly, the accounting and HR systems seem not to have caught up with this. When you and a customer can commercially agree a mutually beneficial business model, it becomes a chore to then translate that into the internal system. More often than not, It cannot be done, as the processes have not thought about these ‘revolutionary’ possibilities. These are systems that are sticklers for process and you end up working your existing systems to somehow shoehorn these new models.

Organisations must realise they can only be as agile as their least agile part of the business. Otherwise you get into a tangle trying to respond quick with your front office, but end up inventing process to placate your back office.

Anyone else grapple with similar issues?

Image credit: dwmbeancounter.com

Posted on: November 18, 2013 12:14 AM | Permalink | Comments (2)

Oct 21, 2013
Categories: Change, ILM, investment, Stakeholder

Organisations are forever grappling with the demand of competing investments that give a varying range of benefits. How do they go about prioritising these? Most organisations use business cases as a means to filter out the projects that deserve funding from the ones that have little or no merit. This then introduces a secondary problem of spending a lot of resources on going through a business case, which will never see the light of day. How do you make sure weak business cases do not get all the way before getting knocked back.

Re-posted from my blog Project Management in Practice.

Example-ILM-Rail-Freight

Investment Logic Mapping (ILM) provides a good way to filter out some of these early investment dilemmas. This is part of the Investment Management Standard developed by the Victoria Department of Treasury and Finance in Australia. The main driver for the development of this standard was the number of complex investments that required compliance, but never articulated the benefits they were supposed to deliver.  Effectively what started as a mechanism to shape individual investments in 2004 has now matured into programme and organisation levels – including refocusing organisations and monitoring benefits.

The theory behind the standard is quite simple. Rather than a complex set of tools, it is centred around three key concepts

  1. The best way to aggregate knowledge is through an informed discussion that brings together those people with most knowledge of a subject.
  2. The logic underpinning any investment (the ‘investment story’) should be able to be depicted on a single page using language and concepts that can be understood by the lay person.
  3. Every investment should be able to describe how it is contributing to the benefits the organisation is seeking.

In Victoria it is now mandatory for most significant investments. In New Zealand the State Services Commission (SSC) mandates the use of ILM for High Value or High Risk (HVHR) projects as part of its Better Business Cases initiative. It must be remembered that ILM on its own is not the tool that will drive the investment. It is a tool to eliminate initiatives which lack merit.

I have just recently undertaken an Organisational ILM as part of a strategic review for an organisation. I have found it an excellent tool to bring out the challenges in an open forum and to agree on strategic responses. The two hour session was perfect to get enough senior leadership in one room to work through the organisational challenges. I also found it a good use of senior stakeholder time, as they are busy people and often trying to agree a course of action individually with all of them is a significant barrier to change programmes.

If you have used ILM before, I’m keen to know your experience. The only thing I had forgotten is being on your feet facilitating for two hours, while everyone else is seated discussing and having refreshments is quite tiring.

Posted on: October 21, 2013 04:23 AM | Permalink | Comments (0)
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