Project Management -- A Waste?

 

Wow, has it been more than three weeks since I last mocked the asset managers’ (read: accountants’) approach to quantitative business analysis? I must be slipping. But getting these guys to stay in their epistemological place requires a certain constancy, so – once more to the breach, dear friends!

How do we know if any organizational or managerial pursuit is worthwhile? Why, the asset managers can tell us – it’s the Return on Investment, or ROI (yes, I know I’ve taken this on before. It’s just such an easy target, having been chronically oversold as it has). It is calculated so:

ROI = (Gain from Investment – Cost of Investment) / Cost of Investment

It’s all very simple, isn’t it? Simply calculate the ROI on anything, such as, say, the Project Management Office, and you have hard evidence about whether or not something is worth investing in, right?

As I discuss in my recently-released, must-have book, Game Theory in Management, the late, great Michael Crichton gave a speech entitled “Aliens Cause Global Warming[1], where he discusses the Drake Equation. The Drake Equation is:

N=N*fp ne fl fi fc fL

where N is the number of stars in the Milky Way galaxy; fp is the fraction with planets; ne is the number of planets per star capable of supporting life; fl is the fraction of planets where life evolves; fi is the fraction where intelligent life evolves; and fc is the fraction that communicates; and fL is the fraction of the planet's life during which the communicating civilizations live. As Crichton goes on to say, there is absolutely no way of knowing any of the parameters in this equation. What appears to be a “scientific” equation is actually structured speculation passing itself off as science.

Let’s revisit the simpler ROI equation. What’s the gain from investing in, say, lifeboats? There’s absolutely no way of knowing that. On board the QE II, they’re useless. On board the Titanic, they were priceless.  What’s the value of an Earned Value Management System (EVMS)? On projects that are successful, they may or may not have played a part in that success. On projects such as, say, the National Ignition Facility, where they were initially eschewed, an EVMS could have easily provided early warning on the massive overruns that project encountered – literally billions of dollars (USD) could have been saved.

Remember that scene from the movie Titanic, where the haughty Cal character is striding past the lifeboats, and actually strikes one with his cane, declaring “Waste of deck space on an unsinkable ship!”? How about the millions in taxpayer money that Carl Sagan finagled for the Search for Extraterrestrial Intelligence program, based on the fraudulent Drake Equation? That’s the type of analysis the accountants bring to your project meetings. It’s easy for them to “quantify” the “expected return” of doing project management, as well as its “cost,” and return a hard number indicating that their management information rivals over in the project management office represent a poor investment, or even a waste. So, you’ve got Cal, Carl Sagan, and your accountant, all lined up to provide you with actionable information for you to make key management and financial decisions, and there’s really only one question:

Are you going to listen to them?