In July 2013, a panda was born at the Taipei Zoo in Taiwan, which was undertaking its first-ever panda breeding project. While the staff was busy looking after the mother, Yuan Yuan, and the cub, Yuan Zhai, they also had another important task: making sure people heard the good news.
By Lynda Bourne
The fundamental reason any organization chooses to undertake projects and programs is to realize or create value for some or all of its stakeholders.
Project managers are key people in this overall value chain; they create the outputs that enable the organization to change. If the project’s deliverables are used, the intended outcomes should be achieved and benefits realized. Finally, if the benefits support the organization’s strategy, value is created.
But what is value, and how can it be assessed and measured?
For instance, if a charity successfully completes a fundraising project to upgrade its mobile soup kitchen, it is able to deliver more meals to more homeless people. But this increases weekly operating costs (there is a negative cash flow), and the value proposition of more disadvantaged people getting a hot meal in the evening is nearly impossible to quantify in financial terms.
In other words, value has been created, but it is not measurable in terms of financial returns. Therefore, the concept of benefits should be expanded to include both financial benefits and other stakeholder requirements.
Benefits, Costs and Value
A useful definition of value is the ratio between the satisfaction of needs (benefits, expectations and requirements), which may be tangible or intangible, and the use of resources (money, people, time, energy and materials), which will normally be definable in terms of cost.
V (value) ∝B (benefits) / $(cost)
However, the units of measure are often unrelated, so the equation is shown as a proportionality rather than equality—it’s difficult to directly align the cost of the mobile kitchen and its supplies against full stomachs and potentially the increased status of the charity.
Managing the overall concept of value creation to maximize value for the organization’s stakeholders requires a coordinated approach by the whole organization. The key elements of such an approach are:
· A value-oriented strategy
· Portfolio management to select the most valuable projects and programs for the organization to undertake. Even in commercial businesses, this requires ways of assessing total value, not just financial returns.
· Project managers need to keep in mind maximizing benefits realization and value creation when making project decisions.
· The organization’s change management needs to be effective and aligned to ensure the intended benefits are actually realized.
· The organization’s governance systems need to require management to report on the final outcomes in terms of the total value realized from the original decision to invest in a project or program.
This framework is relatively easy to describe; the difficult issue is creating a language that describes value from the perspective of the organization and its stakeholders.
For the charity, value may be defined as serving more meals cost-effectively, or reaching more people in need or being seen as the leading soup kitchen in the area (i.e., achieving elevated prestige). Different concepts of what is valuable can shift the focus of both the project and the way the project’s deliverables are used.
In commercial situations, the challenge is deciding how much value is attached to options such as:
· A mining project spending additional resources on environmental protection in excess of the minimum required by law to achieve a better outcome
· A project expending resources to enhance stakeholder engagement efforts
· A project manager spending budget on clerical support to help implement project management processes more effectively
Which options are chosen will always be based on the specific context of the organization, its ethics and culture. What matters is making sure the understanding of value is consistent and agreed to by the organization’s governors and key stakeholders, and incorporated into portfolio, project and change management practices.
Are you discussing real value with your stakeholders?
Project managers work hard to keep stakeholders informed. Nonetheless, sometimes when a stakeholder asks about the status of a project, he or she gets the impression that a project manager is hiding something or being less than honest.
Here are three circumstances where stakeholders may get this feeling, and how you as the project manager can handle them to ensure you’re viewed as trustworthy.
1. You can’t disclose certain information or documents. On our projects, we become the caretaker of all information and documents, including some that can be extremely sensitive. Stakeholders might request the home phone number of a team member, the contingency target of a budget or other confidential information. In some cases, your organization may require a security clearance or other confidentiality measures.
In this sort of scenario, it’s appropriate for a project manager to say, “Let me check on disclosure agreements and provide allowable information."
2. You’re the bearer of bad news. Project managers sometimes must communicate negative issues, risks or unforeseen events to stakeholders. The risk here is that a stakeholder might believe the project manager had prior knowledge of the problem, or even allowed the problem to fester as a way of extracting additional funds for the project.
To avoid a “shoot the messenger” scenario, it’s a good idea to not blame someone for a problem. A better tactic here may be to arrange a discussion on the topic with key decision-makers. This could lead to a satisfactory acceptance or a suitable compromise.
3. You made an error. You may have inadvertently distributed a report with wrong information. Mistakes happen. As soon as possible, apologize and acknowledge that the wrong information was given.
Our reputations as project managers depend on us being creditable and trustworthy. We must always be honest and remain professional and polite, no matter what the concerns of a stakeholder are.
How do you handle stakeholders who question the truthfulness of a project’s status?
By Jen L. Skrabak, PMP, PfMP
Organizations struggle with selecting the right projects or programs for their portfolios. We see this in project success rates that haven’t increased much beyond 64 percent during the last four years, according to PMI’s Pulse of the Profession® 2015 report). We also see this in the companies that have faded from relevance or been obliterated by the pace of innovation and change—remember Blockbuster, Meryvn’s, RadioShack and BlackBerry?
The challenge is to select the right projects or programs for the right growth, placing the right bets that will pay off in the future. Here are four tips to help you do this.
1. Choose Projects and Programs You Can Sustain.
Know your organization’s current strengths and weaknesses; don’t be overly optimistic. It’s great to have stretch goals, but remember that the benefits of your project have to last.
Don’t forget about culture. Sometimes the primary reason a new project or program result doesn’t stick is that the organization’s culture wasn’t there to support it.
Organizational change management, including a defined communications and stakeholder engagement strategy, is crucial on large-scale projects and programs where hundreds if not thousands of processes may be changing in a short amount of time.
In addition, establishing a culture of project management with engaged sponsors, mature project and program management practices, and strategically aligned portfolios helps sustain projects and increase success rates.
2. Know Your Portfolio’s Upper Limit
Don’t only focus on a portfolio goal such as, “Achieve US$100 million in portfolio ROI in 2015.” Also focus on the portfolio’s upper capability.
The upper limit of your portfolio may be defined by budget, capabilities (skills or knowledge), capacity (which can be stretched through new hires or contractors) or culture (existing processes, organizational agility and appetite for change).
Define your portfolio’s upper limit and the highest resource consumption period and plan for it, rather than the initial ramp. Taking a typical adoption curve for a new project or program, your portfolio upper limit may look something like this:
3. Don’t Be Afraid to Admit Mistakes—and Fix Them Quickly
When we initiate projects and programs, and they’re not performing as expected, how quickly do we course correct, and if necessary, pull the plug? Having shorter weekly or monthly milestones and project durations is better than longer ones.
But are you equipped to act quickly when those weekly milestones are missed? How many weeks do you let a failing project go on, hoping it will get back on its feet, before ending it?
I have seen projects and programs that are not yielding the expected value being allowed to continue. Often, the sponsors still believe in the value of the project, even in the absence of metrics showing financial results. This is why setting clear financial performance metrics and monitoring them throughout development and delivery is so important: they can help project practitioners kill a project quickly if needed.
I once worked for a company that was experiencing 25 percent year-over-year growth for its products. It was a frenetic time of hiring new people, building new plants, and initiating billions of dollars in investment for new projects and programs.
However, when the U.S. Food and Drug Administration required a new warning on one of the company’s flagship products, its sales dropped 25 percent (US$2 billion annually) almost overnight. Projects and programs in flight were asked to take a 10 percent, and then 20 percent, reduction in their spending while still delivering the planned results. Planned projects and programs were suspended.
While it was difficult, the organization passed the test with flying colors. In part, this was because it didn’t spend time lamenting environmental factors but instead worked to address them—quickly.
4. Measure Your Averages
It’s not about the one big project or program success, but the successes and failures averaged over a period of time (say, three to five years). Don’t just focus on the big bets; sometimes slow and steady wins the day.
How do you pick the right projects and programs for your portfolio?
In my previous post, I promised to tell you a sad but true story of a sponsor who was against his own project. As you know, lack of sponsorship is one of the major causes of failure in projects. It is very hard to make things happen without senior-level support.
According to author and business consultant John P. Kotter, building a guiding or supporting coalition means assembling a group with the power and energy to lead and sustain a collaborative change effort. That is when strong sponsorship comes to mind in project management.
Unfortunately, I was the project manager tasked with the initiative featuring the unfriendly sponsor. By that time, I knew some of the tricks of the change management trade. However, I naively ignored that people have their own hidden agendas.
Sizing Up the Sponsor
The sponsor, let’s call him John, was a division manager with almost 25 years dedicated to the same organization. He proposed an audacious project to outsource almost half of his division, creating a new company to own the assets.
It was a brilliant idea, strictly aligned with the organizational strategy. There was a solid business case supporting headcount and cost reduction, improved service levels and an outstanding return on investment. The board of directors promptly approved the project and it took off with strong support.
You already know that a project, by definition, is a disturbance in the environment. “Project” is synonymous with “change.” Change usually implies resistance. This project faced enormous challenges related to cultural and structural change, power, politics and more.
It took me some time to realize John was a real threat to the project. At first, I shared all my information with him, and I trusted that he was an enthusiastically.
But along the way, I noticed John was not performing his sponsor role properly. In particular, he was not working on selling or on leadership.
Figure 1 – Sponsor’s roles (Trentim, 2013)
Consequently, crucial organizational decisions were postponed, resulting in serious negative impacts on the project. John was responsible for leading change, but he wouldn’t do it. The project was failing because I could not overcome the ultimate resistance barrier: the sponsor.
I started asking myself about John’s real intentions. It was a very uncomfortable situation.
One day, I was discussing the sponsorship issue with my core team members. Alice asked me, “Do you really think John wants this project to be successful?” A few weeks before, my answer would have been “Sure!” Now, I decided to hold a problem structuring session based on Alice’s doubt.
To our amazement, we concluded that if we were in John’s shoes, we would want the project dead.
It was simple. Although there was a solid business case with wonderful benefits, none of them appealed directly to John. In fact, John would be demoted from senior division manager to manager of a department of less than half its former budget and staff. He could even lose his job after the successful startup of the outsourcing project.
I confronted John. He tried to change the topic several times. Finally, he confessed. I will never forget his words: “Corporate politics forced me to initiate this project. If I did not propose the project, someone else would initiate it and carry it on successfully, destroying my division. I had no choice.”
After John’s confession, he was replaced by another sponsor and the project was soon back on track.
Ideals vs. Reality
This experience permanently altered the way I view sponsors. Ever since then, I’ve never assumed my stakeholders are ideal.
In an ideal project, you would have:
In reality, you have:
The fundamental lesson learned here is that managing stakeholders is far from simple. It is a combination of science (tools, techniques, and best practices), art (soft skills, communications, political awareness) and craft (experience).
What was your biggest stakeholder management challenge? Share your experiences and lessons learned below.