“Welcome to the (PM) party, pal!”

 

In the 1988 action film Die Hard, Bruce Willis plays the role of New York City detective John McClaine, who becomes caught up in an attempted terrorist takeover of the offices of the Nakatomi Corporation, where his estranged wife works. As one could imagine from films of this genre and era, there’s a fair amount of violence before (and after) the Los Angeles Police Department is alerted that something is amiss, but, even after an initial investigation, they remain unaware. This is only remedied when McClain drops the body of a slain terrorist many stories onto the hood of the police car driven by the investigating officer. Having done so, McClain looks out the shot-out glass pane that the terrorist just exited, and spits out the line “Welcome to the party, pal!” The still shot of Bruce Willis uttering that line has become the basis for a popular internet meme, typically meant to communicate a sense of disappointment (or even disgust) that someone assigned to a specific job should remain oblivious to critical and obvious developments well past the time that they should have at least started doing something about them.

Meanwhile, Back In The Project Management World…

I’ve written often about PM techniques’ unequalled capability to accurately predict such vital management information as how long a particular activity, task, or even project will last, or how much it will cost at completion. The use of action item lists, updated via responsible managers’ input along the lines of whether the activity in question is on-time or late, is a common way of trying to get a handle on when things will be completed, but it’s completely unreliable. Similarly, using the general ledger to provide a so-called “burn rate,” or amount the project is spending by reporting period (usually monthly), and then multiplying that figure by the number of reporting cycles (hypothetically) left in the project to derive an Estimate at Completion (EAC) only produces wildly misleading results, even when these figures are averaged out, or massaged via other Gaussian Curve methods.

No, the only valid way of deriving an accurate figure for activity/task/project duration or total costs belongs to PM, specifically Critical Path Methodology (CPM) for duration and Earned Value (EV) for both duration and cost. The simplest version of the formula is to divide the activity’s/task’s/project’s percent complete into its cumulative actual costs for a reliably accurate Estimate (cost) at Completion. This formula also works for duration: divide the percent complete figure into the amount of time that has elapsed since the work began, and you’ll have a usable end-date.

But here’s the thing: this simple and effective technique has been around for decades, if not longer. “If that’s the case, Michael” I can hear GTIM Nation say, “then why aren’t those techniques much more widely used, if not commonly-recognized as the standard?” I believe the answer has to do with factors that are outside nominal management science boundaries, and firmly in the realm of Organizational Behavior and Performance. Perhaps the most obvious example is provided by our friends, the Accountants, who typically hold that any piece of management information that is quantified in monetary units must originate from the general ledger, and Generally Accepted Accounting Principles, or GAAP. Think I’m exaggerating? Consider the use of the term “the bottom line.” Commonly used as shorthand for “I believe that X is the ultimate impact of the conditions/issues we have been discussing,” my guess is that it’s originally derived by how people read and understand a profit-and-loss statement, where the summary answer to how profitable a given organization is shown on the literal bottom line of that report. Since the standard Earned Value reports Cost/Schedule Status Report (C/SSR) and Cost Performance Report (CPR, Format I) have the aforementioned calculated Estimate at Completion documented in the far right-hand column, I think we PM-types should stop using the term “bottom line,” and substitute “right-hand column” instead. Also, no real project (as distinct from an organization, or function) spends money at a consistent level month-to-month, and pretending to the contrary doesn’t make it right.

Then we have our other friends, the risk managers (no initial caps). They have managed to convince themselves (and, sadly, many others) that the use of Gaussian curves will yield usable management information on what things will go wrong on a given project, and what the cost and/or schedule impact will be. Of course, the Earned Value and Critical Path systems will accurately inform on cost and schedule performance, whether they are influenced by things that management anticipated or not. And, again, this type of analysis has been around for decades. Somehow, the risk managers (no initial caps) have influenced the selection of analysis techniques away from the optimal and towards their, ummm, sub-optimal versions. It’s maddening.

All of which leaves us PM-types in the unenviable position of having to witness “managers” choosing the wrong analysis techniques, hawked by Accountants and risk managers, while remaining oblivious to the optimal PM ones. And, when these managers finally use these PM techniques, we can only hope to imitate Bruce Willis’ steady and mildly ironic tone when we say “Welcome to the party, pal!”