By: Nader K. Rad, PMBOK® Guide-Seventh Edition Development Team member
Once Upon a Time!
There was a policy in one of the companies I used to work for about 20 years ago: “Every procurement activity should be done in the headquarters, rather than in projects’ construction sites”. They believed it was more cost-effective.
One day, I realized that in one of the attempts at cost-effectively purchasing material for covering the joints of concrete sections, the process was so prolonged that the critical concrete work was paused in one of the sites for four days. I was the project planner at that time and I immediately went to the project manager, who simply told me that organizational processes should be respected! I went to the procurement department and realized that we just didn’t speak the same language. So I went back to my desk, called the project site, and asked the technician responsible for that section whether they could buy the material locally. He said they could do it in one hour. The cost? Only about €250 for two weeks’ supply!
I sent them €250 from my own pocket to buy the material and resume work. The company reimbursed me but asked me not to do something like that again, and of course, I kept doing that.
I’m sure you’re thinking about many problems in this scenario: They needed a more proactive project manager, they needed to use “manage by exception”, etc.
One aspect of the problem was that they cared about money (which is fine), but not in the correct way. It’s not only about the money we spend, but also about the money we [can] gain. What we want to optimize is not the cost, but the “benefits ÷ cost” ratio – given that we consider all types of benefits, short-term and long-term, and direct and indirect (e.g., reputation, market reach, and knowledge).
This relatively subjective “benefits ÷ cost” ratio is what we usually call business value, or value for short. We can always ask ourselves whether our selected choice is the one that contributes most to the value of the project/product.
Do you consider value in your decisions?
The other problem is that they were not adaptive enough.
When we talk about adaptation, it’s usually about adapting the product of the project to the environment, which is what happens in adaptive (Agile) projects and is very important and interesting. However, that’s not the only type of adaptation; there’s another one that applies to every type of project: adaptation of our delivery and management approach to their environment.
In my example, those problems could have been prevented if proper planning and risk management were in place. However, for some reason, that level didn’t exist. In such a case, when we see that we can’t fix our planning and risk-management system in order to have the ideal procurement method, we need to change our procurement method to adapt to this situation and prevent bigger problems.
Do you stick to your ideal methods or adapt to the environment?
Another issue with concrete work in that project was that the concrete was going to be exposed in the final product, and therefore, we needed to do some extra work to make sure the surface was clean enough. One day, someone suggested a simpler way of doing that; according to experienced engineers, the quality was much lower, but it was a lot faster and less expensive. So we decided to experiment with something!
The project was for building a central library in a university, and we had access to thousands of end-users! We offered €30 to any student who wanted to join our experiment, and we picked the first 100 volunteers. We had two walls finished, one with each of the two methods, and we asked the students to tell us which one was better. In the end, we found no significant difference in the number of votes for the two methods, and we concluded that the new method was as good as the old one for our end-users, and so we decided to proceed with it.
It happens a lot: Either we spend too much money on an element of the product that doesn’t make any difference for the end-users, or we make it in a way that doesn’t satisfy them.
Isn’t it a good idea to focus on outcomes before outputs and activities?
It doesn’t matter what type of project we have; it seems like we can always ask these three questions in our activities and decision-making process:
- How does it impact the value of the project/product?
- What impact does it have on the outcomes?
- Am I adapting to my environment, or just trying to force my ideals?
If these have the potential to help us in all or most projects, then maybe we’re talking about principles for running projects! Perhaps those principles could be summarized as:
- Continually evaluate project alignment to business objectives and intended value
- Utilize capabilities and learning throughout the life cycle to change, recover, and advance