“No Scope For You!”

 

In my most recent post I referenced the (American situation comedy) Seinfeld episode entitled “The Soup Nazi,” premised on a situation of a restaurant that served soup, and was so popular that the staff felt at liberty to treat their customers abruptly, or even contemptuously. Of course, this notion was being advanced for comedic effect, but it’s really not very far removed from reality. The examples are all around us.

Do a Google® search on “ticket lines,” and hundreds of images pop up of masses of people queuing up to wait for access to concerts, movies – heck, there’s even one for a handmade bicycle show! How much “customer relations management” do you suppose these entertainers, movie theater managers, or bicycle suppliers need to employ? If you said “none at all,” go to the head of the class.

Consider the classic quote from Ralph Waldo Emerson: “If a man has good corn or wood, or boards, or pigs, to sell, or can make better chairs or knives, crucibles or church organs, than anybody else, you will find a broad hard-beaten road to his house, though it be in the woods.”[i] Let’s multiply this formula by negative one, shall we? I’m thinking its inverse is something like this: “If  your product is mediocre, or even sub-standard, you could have your shop right off of Main Street, and you’re still going to have problems attracting and retaining customers,” which would seem to fly in the face of the old commercial real estate axiom, that “it’s all about location, location, location.”

Of course, the first step in customer relations management involves price-setting: McDonald’s isn’t out-performing virtually every steak house in existence because it offers better cuisine – it’s out-performing them because it offers better cuisine for the money. But from a project management point of view, price-setting is rarely an option, since our projects tend to be awarded based on a competitive sealed-bid process – it’s not as if, should our projects suddenly begin to perform poorly, we can offer to knock the price down. It’s usually the opposite – when projects go south, the remedy virtually always involves more money.

Which leads us to the question: In the competitive-bid project arena, how does a project manager lay claim to more money from the existing customer for the agreed-to scope? And the indisputable answer is: via the risk management process.

Think about it – when is the risk management function actually invoked? Isn’t it always in one of the following two events?

·         The establishment of a contingency reserve, or

·         Laying claim to additional customer funds, supposedly due to something happening that the project team didn’t foresee.

For the record, just because a contingency reserve is established at the beginning of a project does not alter the fact that it’s a vehicle for accessing funds over and above the project’s original performance measurement baseline (PMB).

Taken in this light, then, the whole risk management industry becomes simply a facade for changing prices in the sealed-bid project arena, and those customers who place great emphasis on the generation of risk analysis exhibits actually end up enabling the practice. It’s the PM equivalent of having your contractor snatch the completion of your project from your grasp, and exclaiming “No scope for you!”