5 Project Management resolutions with a financial theme
It’s the time of year when project managers (and everyone else) are looking to make resolutions. You know, the kind of promises you make to yourself in the dark days of winter and then have completely forgotten by Easter.
On the off chance that you’ll be making resolutions this year, here are some you could consider. They all have a money-related theme, so if you want to brush up your budgeting or polish your financial management skills in 2013, these could be great resolutions for you to adopt. So here we go: 5 promises for better money management over the next 12 months.
1. I will look at historical data for forecasts
When you are managing projects that are repetitive in nature and that the team has a lot of experience of, it’s very tempting to simply let them estimate the length of tasks and assume that they know what they are doing. Most of the time, they probably will. But it is worth validating their estimates against historical data from timesheets and previous project schedules. Use your online project management software to pull up reports of how long things took the last time you did them.
This could be at the level of an individual task, like completing a particular piece of coding, or a project phase, like testing. Or both. The purpose of checking is to make sure that your estimates really are sound and that the people who are estimating are not making the same mistakes about task duration on every project.
2. I will do my timesheets in a timely fashion
This is a personal resolution for you, although you could extend it to all your project team members. The risk of not doing your timesheets on time is that you forget exactly what it was that you were doing. As a result, you block out 8 hours per day for a task called ‘project management’ which doesn’t give you any breakdown of how you actually spent the time. Worse, you could be booking time to one project when in reality you got pulled off that project to spend half a day on some other project. These things happen in real life, to you and your team members.
By aiming to complete your timesheets at least weekly you’ll not have long enough to forget what you were working on!
3. I will understand Earned Value Analysis (or teach someone else how to do it)
If you don’t understand EVA, make 2013 the year when you get your books out and study how it works. If you do understand EVA, make a resolution to share your knowledge with someone else this year. Even if you don’t use EVA on your projects, it is a very useful skill to have.
4. I will do my expenses on time
Most project managers will incur expenses in the course of their job, such as travel to meetings. Not doing your expenses on time means that you are out of pocket. Many companies only pay expenses once a month in the monthly pay run, so don’t let your expense bill mount up – that’s effectively a loan to your company.
Get your personal paperwork in order by keeping receipts together, noting down your mileage after every trip and understanding the schedule for submitting expenses so that you don’t miss the deadlines.
If your expenses are being cross-charged to your project it is even more important to get your expenses in on time. If you don’t, your project budget will reflect that you have more ‘in the bank’ than you actually do.
5. I will review my budget quarterly
You do this already, don’t you? If not, make 2013 the year when you review your project budget forecasts regularly. If your project runs over two quarters you’ll probably be asked to do this by your finance team anyway, but even if you are not, it is still good practice to get out your spreadsheets and just check that you are still on track to stick within your budget tolerance limits.
Have you chosen any of these as your resolutions for 2013? If not, what are you having as your resolutions instead?
Are project forecasters “fools or liars”?
“The majority of forecasters are fools or liars,” says Professor Bent Flyvbjerg from the BT Centre for Major Programme Management, at the Sa?d Business School, University of Oxford, in a new paper on inaccurate estimates for major projects.
The paper, published in the International Journal of Project Management, sees Professor Flyvbjerg criticising the way that forecasts for projects are put together. He says they are inaccurate and provide poor material from which to make decisions about cost and benefits.
“Estimates are commonly poor predictors of the actual value and viability of projects, and cannot be trusted as the basis for informed decision-making,” he says. “These forecasts frequently misinform decision makers on projects instead of informing them. Some of the inaccuracy comes from genuine forecasting mistakes arising from over-optimism, but some estimates are deliberately misleading, designed to secure financial or political support for a project.”
You probably know of examples of where a project manager has padded estimates for one reason or another, by Prof. Flyvberg is pretty scathing about forecasting methods and the people who use them.
“Many forecasts are garbage and can be shown to be worse than garbage,” he is quoted as saying in a press release from the university. “These reports give the client, investors and others the impression that they are being informed about future demand, or the costs involved in a major project, when they are being misinformed. Instead of reducing risk, reports like this increase risk by systematically misleading decision-makers and investors about the real risks involved.”
What’s the answer?
Prof. Flyvbjerg says that the answer is for everyone to be a bit better at not putting up with this (I paraphrase). For example, he recommends that clients should ask for their money back when they receive reports which later prove to be significantly inaccurate and misleading. He even goes as far as saying that they could demand compensation (some contracts must have a clause for this in anyway). His most radical idea is that in some cases criminal action would be justified. “Merely firing the forecaster may be letting them off too easily,” he says. “Some forecasts are so grossly misrepresented and have such dire consequences that we need to consider suing them for the losses incurred as a result. In a few cases where forecasters foreseeably produce deceptive forecasts, criminal penalties may be warranted.”
Personally, I can’t see many project managers ending up in court because of poor scheduling, but as this has come from the Centre for Major Programme Management, Prof. Flyvbjerg is really talking about complex, mega projects.
When we say ‘everyone’, Prof. Flyvberg includes the professional bodies in that too. He calls on them to use their codes of ethics to penalise and possibly exclude members who produce unethical forecasts. “This needs to be debated openly within the relevant professional organisations,” he says. “Malpractice in project management should be taken as seriously as malpractice in other professions like medicine and law.” How many project managers genuinely produce unethical forecasts and how many are just incompetent? I think it would be hard to decide if someone was acting in good faith and to the best of their abilities or whether they were deliberately altering estimates for political gain.
A better way of forecasting
As you would hope from someone who is so outspoken about this, Prof. Flyvberg has all the answers. His answer is to turn to his own work and in this IJPM paper he sets out the case for quality control and due diligence to be applied to the evaluation of front-end forecasts. Unfortunately, I think his answer only works for massive projects and not for the type of forecasting and estimating most project managers do on their projects.
“Recent research has developed the concepts, tools and guidance on incentives that could help curb both delusional and deceptive forecasts,” he says. “Whether forecasters are unwittingly or deliberately under-estimating the costs, completion times, and risks of projects, and over-estimating their benefits, we need to have a systematic basis for evaluating their findings in order to make informed investment decisions. Given the high cost of major infrastructure projects, the irreversibility of decisions, and the limited availability of resources, this is clearly critical for both public sector and private sector projects. Significantly more accurate forecasts can be produced by looking at the evidence available from previous similar projects which have been already completed – what I call, taking an ‘outside view’. This seems so simple, but in practice it is transformative and leads to much more accurate forecasting.”
In other words, take large data sets or statistically relevant data for projects in your sector, apply due diligence, estimate from the basis of past experience and critically evaluate the forecasts. You’ve spotted it – the big downside to this estimating approach is that you need large, validated data sets to draw benchmark data from previous, relevant, projects. If your PMO has been up and running for years and has gathered all this, and you never do any projects which innovate or deliver something new in a way you haven’t done before, then you could make use of this technique.
If you don’t have all that data to hand, then this method of forecasting will not scale from mega projects and programmes to the humble projects that you and I work on. While using historical data is great and we should all look to the past to better predict the future, we would be wrong to expect this model to work for all projects.
Normally on a project you will plan out the tasks required to do the work, and then add in the resources needed to carry out those tasks. Here are 5 things to take into account when doing resource planning on your project.
All team members need holidays or vacation time. Remember to plan for this when you are scheduling resources – you may find that a critical resource has already planned to take leave during a time on the project when you would really rather that they are around. Talk to the line managers of your team members about when they already have holiday time approved.
Also factor in religious and other cultural holidays. Team members may want to take time off around these times – and that goes for school holidays too.
2. Sickness absence
Unfortunately, team members can go off sick without any notice. While the option to work from home allows many people to soldier on when they may be too ill to make it to the office, you can’t rely on people to not be ill.
One way allow for this is to consider how you will backfill a project role if the person currently doing it is away from work. While you shouldn’t allocate two resources to every task just on the off chance that someone will get the flu, you should have a plan in mind just in case someone drops out of the team due to sickness absence at short notice.
3. Single point of failure
When task planning, look at who on your resource plan is the single point of failure. Who has worked on all on the Finance tasks and has all the operational knowledge? On long projects it can be particularly difficult to switch someone in at the last moment if your single point of failure person hands in their resignation.
4. Negotiating with line managers
If you don’t have direct responsibility for the team member concerned, you will have to negotiate their time on the project with their line manager. This can be tricky, especially if you only need them on a part-time basis. You may find that they can’t do the job they used to do before the project on a part-time basis, and their line manager may not find it convenient to have them back. It may be possible to job share the role in this case.
You should also consider what would happen if your schedule slips and you end up needing the team member for a longer period of time – how will you negotiate this with their line manager?
5. The triple constraint
If you lose a resource back to their day job or for any other reason, you will have to consider the impact that this will have on your task scheduling. The traditional triple constraint, for all its faults, is a good place to start discussions with your sponsor. If you have fewer resources, can you negotiate a longer time to deliver the project? Could you negotiate more money to pay for additional resources so that you have more confidence about reaching the original milestones?
In the end this will be your project sponsor’s decision, but you can at least take him or her some options to consider.
Resource allocation will no doubt change your task plan. You really need to review both the tasks and the resources in parallel so that you can put the two together and come up with an effective and realistic schedule. What other tips do you have for successful resource scheduling? Let us know in the comments.
Managing Money Q&A (Part 4): Why do projects go over budget?
It was a while ago now that I gave a webinar on managing money on projects, but it is taking a long time to answer all the questions that I didn’t get round to doing during the live session. Thanks to all the fabulous participants, who asked such brilliant questions! I am still trawling through them hoping to answer them all, and here is today’s batch of managing money Q&A.
Managing Money Q&A (Part 3)
It wasn’t that long ago that I gave a webinar on managing money on projects, but it is taking a long time to answer all the questions that I didn’t get round to doing during the live session. Thanks to all the fabulous participants, who asked such brilliant questions! I am still trawling through them hoping to answer them all, and here is today’s batch of managing money Q&A. They are all about timesheets and time tracking today.
You could have a big bucket task called ‘project management’ but I expect you would get more use out of the data if you broke it down further.