Project Management

Nevermind With Whom – Just Worry About The What!

From the Game Theory in Management Blog
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Modelling Business Decisions and their Consequences

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Nevermind With Whom – Just Worry About The What!



When discussing project communications (ProjectManagement.com’s theme for August), the so-called experts tend to spend a lot of time focused on the identities of the senders and receivers of the information. I think this whole discussion can be brought to an appropriately brief conclusion via the use of Game Theorists’ favorite tool, the payoff grid:

 

 

Inappropriate Recipient

Appropriate Recipient

Communication Provided

Too much of this

It’s all good

Communication Withheld

It’s all good

Not as common as we are being led to believe

 

The communications experts I’ve read seem to spend a lot of time worrying about the scenario in the lower right hand block, which leads them to go on excessively about the “need” to expand outgoing communications to ensure it never, ever happens, seemingly oblivious to the fact that that strategy does absolutely nothing for the It’s all good scenarios, and dramatically amplifies the dangerous scenario in the upper left block. Additionally, consider the potential outcomes of the non-It’s all good scenarios. If some communication is withheld from a “stakeholder” who ought to have received it, what’s the worst that could happen? That the project isn’t a recipient of some sort of insight that might have helped it perform better? Now consider the potential downside of communicating relevant project information to an Inappropriate Recipient, a recipient that, perhaps, seeks to slow down (or even derail altogether) the project. Surely this latter should be considered far more detrimental to the chances of the project’s overall success than missing out on some potential insight. My main problem with the whole discussion, however, is that it completely misses a much larger point – Is what’s being communicated actually valid?

One of my guilty pleasures during the 1980s was watching the prime-time drama Dallas, where the famously Machiavellian J.R. Ewing would often use the ruse of sending out false information to his competitors, specifically Cliff Barnes, in order to induce them to take an action that would ultimately benefit Ewing Oil, if not ruin the competitors in the process. Since oil is a commodity, and commodities are notorious for their seemingly capricious and arbitrary price fluctuations, any piece of data that swerved near insider information could lead to astonishing profits (if true), or ruinously bad decisions (if false). J.R. was a master at manipulating such communications, and it wasn’t through simply lying. In one episode I recall J.R. actually did invest significant resources into an oil field that he knew would not produce, all in order to induce a reaction from the other members of the fictional cartel to which Ewing Oil belonged.

This being the case, what types of Project communications are most vulnerable to inaccuracies, or out-and-out mendacity? Several devious tactics are available to our latter-day Iagos, but the thing about the common tactics is that any PM, or auditors of PMs, knows them, and knows them well. Attempting them in today’s PM-savvy environment would be analogous to bringing your own set of marked cards into a Las Vegas casino, and expecting the dealer to use them – it simply wouldn’t work. So, is there any commonly-used information bit that is also vulnerable to misdirection? Yes, yes there is.

The information bit I’m referring to is the so-called bottoms-up EAC. Yeah, I know GTIM Nation is probably tired of my railing against it, but I’m not going to go back over the reasons why it’s bad information – I’m going to discuss how GTIM Nation members can reveal for themselves when they’re being lied to misled.

Recall the basis for the reliability of the calculated Estimate at Completion, the study performed by David Christensen on Cost Performance Index (CPI) stability.[i] Since the CPI virtually never changes more than ten points once the project has cleared the 20% complete point, a simple comparison of the CPI with its near-cousin, the To Complete Performance Index, can be quite illuminating. For those of you new to Earned Value analysis, the TCPI is calculated so:

To Complete Performance Index = Work Remaining / Budget Remaining

or

TCPI = (Total Budget – Cumulative Earned) / (Total Budget – Cumulative Actuals)

Like the CPI, everything’s going exactly as planned if the TCPI = 1.00. Unlike the CPI, if the TCPI is above 1.00, something’s probably wrong, and more wrong the further you get above 1.00. So, here’s the litmus test for evaluating whether or not you’re being hoodwinked by a “bottoms-up” EAC: If the subject project’s CPI is more than ten points below its TCPI, then any EAC more optimistic than the calculated one is almost certainly false. If you want to be conservative, go ahead and set the “this EAC is nonsense” indicator to trip if the TCPI is 15 or 20 points above the CPI. In any case, if the TCPI is more than 20 points higher than the CPI, then the project isn’t coming in on-budget, or even close.

And if that’s not the communication being relayed, you don’t need to be concerned about the who, you need to worry about the what.

 


[i] https://www.researchgate.net/publication/237574533_Cost_Performance_Index_Stability_Fact_or_Fiction

Posted on: August 24, 2020 10:29 PM | Permalink

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Very interesting, thank for sharing

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