The PMOs' Friends

 

Last week I wrote of the PMO’s natural enemies, the accountants (and other asset management-minded ones), and project management theory hucksters, who outrageously over-sell their particular discipline’s or techniques’ capabilities. The Project Management Office has other natural enemies, of course, but these two are prime. Fortunately, the PMO also has natural friends within the organization, and they are, paradoxically enough, enlightenment and fear.

Enlightenment is one of the best natural friends of the PMO. As I have mentioned previously in this blog, the worst 20% of managers who are in command of 80% of the information they need to obviate any given decision will out-perform the top 80^th percentile managers who have access to only 20% of the information they need to make a completely informed decision. The enlightened executive who is aware of this will make every effort to make accurate, timely, and, most of all, relevant information available to his managers and project team(s), and two indispensable information streams – how your projects and performing in cost and schedule performance space – typically come exclusively from the PMO. Oh, the accountants or others may try to make the case that this information can come from the general ledger, or from some sort of issues tracking database, or something, but that’s all hooey. Schedule performance comes from a properly set-up critical path method-capable system, almost exclusively. I say almost because a properly set-up earned value management system can also provide accurate schedule performance information, but the EVMS’ primary role is to provide project cost performance information. Without these two systems, however basic or elegantly implemented, there is simply no way of accurately knowing how your projects are performing, or where they are likely to end up.

This last is key. Where are the projects in your portfolio likely to end up? Some years ago the director of a rather large organization asked his mid-level and above managers to send him an e-mail that described their main worry. What’s keeping you up at night? The largest set of responses were derivatives of the concern that they were sitting atop a project disaster, and no one on their project team would tell them about it until it was too late to avoid massive overruns or delays. This fear of being caught flat-footed when project disaster looms, all the while knowing that if they had just been informed of the issue when it was younger it could have been dealt with, is a natural ally of the PMO. You see, the PMO can provide this highly relevant information, accurately and timely, but, most important of all, quickly and easily.

Consider the elemental estimate at completion, or EAC. The basic way of calculating this obviously extremely relevant piece of information is to divide the budget at completion (BAC) by the cumulative cost performance index (CPI). (For those of you who don’t have an EVMS that can deliver this piece of information, stand by.) Studies have shown (Christensen, et al) that a project’s CPI only rarely varies more than 10% once the project has cleared the 15% complete mark. The implication here is that the BAC / CPI formula is going to be accurate to within ten points once the project is only a bit out of the starting gate. But another fascinating piece of this puzzle is that the BAC / CPI formula can be algebraically reduced to dividing your cumulative actual costs by the estimated percent complete. Our “friends” the accountants have the first of these numbers. All the PMO team member needs to do to deliver an accurate estimate at completion is to come up with an estimate of the project’s percent complete, and this is not that difficult of a parameter to nail down. All you need is one subject matter expert, and you’re there.

And here’s the kicker – the same thing is true for duration!  Simply divide the cumulative duration by the same estimated percent complete, and you have a poor man’s calculated schedule end-date, and it’s going to be accurate to within 10%. Now, I have a couple of questions I would like to pose. To all you project managers out there, I’m going to channel my inner Montgomery Scott, from Star Trek IV, The Voyage Home. Scotty has just shown a plant manager/engineer the formula for transparent aluminum, and asks him “Would that be worth somethin’ to ya?” If I could tell you to within 10% how much your project is going to cost at completion, before you are even half-done, and how long it will take, quickly, easily, cheaply – is that worth somethin’ to ya?

And to all you PMO directors – I just showed you how to quickly, cheaply, and effectively alleviate the fear of all of those managers who want to avoid looming project disasters stemming from a lack of information. Is that worth something to you?