The new operating model for project teams: Balancing flexibility and standardization
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As Randy’s Marketing Management Team cleared out of the conference room, Oscar and I sat back down to review the data list I had just handed him.
“Talk me through this, Mr. Raspberry. I’m not sure I understand everything on this list.”
“I’m happy to, but first, Oscar, did you capture the estimate of the percent completes for all of the projects in Jane’s portfolio?”
“Yes, they are in a spreadsheet on my computer.”
“Do you also have access to each of their Budget at Completion and cumulative actual costs?”
“Sure do! Problem is, I can’t transfer that data to you. It’s considered company sensitive, even beyond the terms of your non-disclosure agreement.”
“That’s alright, Oscar, I understand.” I consoled. “I don’t need to know the details. This is how I want you to process that data. Keep your data in your spreadsheet. Create a new tab in the same file, and use these as your column heads:
- Project ID
- Budget at Completion (BAC)
- Percent Complete
- Cumulative Actuals
The next set of columns will contain calculated information, specifically:
- Cost Performance Index
- Estimate at Completion
- Variance at Completion
This is how you calculate those last three columns’ values. For Column E, Cost Performance Index, multiply the values in Column C and B, and divide the product by Column D.”
“Okay, I get that, but you don’t have nearly enough data to do either an Estimate at Completion, nor the Variance.” Oscar objected.
“Trust me. For Column F, the EAC, simply divide Column D by Column C.”
“I’ve never even heard of that!”
“Oh, but you almost certainly have.” I corrected. “Recall the basic formula for calculating the EAC, by dividing the total budget (BAC) by the Cost Performance Index? That formula can be algebraically solved to dividing the cumulative actual costs by the Project’s percent complete.”
“But that’s not the way Jane has us do EACs.” Oscar continued. “She insists that we re-estimate the remaining costs on a Project, and add that number to the cumulative actuals.”
“Yeah, well, that doesn’t work.” I replied. “And its failure rate will become clear once we’ve compiled this information. Just for fun, add those EACs for the projects for which they are available, and put them in Column H. And, of course, Column G will simply be Column B minus Column F. Can you pull this together for me, and soon?”
“I think so. But what about the information on Randy’s Marketing Management organization? You heard him tell Lindstrummer that they don’t even have the software to manage their data – how will we take their interests into account, if we can’t quantify their stuff?”
“We can’t be precise, but we can get close enough for the purposes of this analysis. Ask Quinn for two pieces of data from her spreadsheet: we’ll need to know the average win rate of the proposals they sent out over the last full quarter, and the total proposal backlog amount for this fiscal quarter.”
“I think I can do that, but how does that help with supporting the narrative that the resources surrounding the new tech development should go in the Project Management direction?”
“We’re putting together a Corner Cube model, and those parameters go into the Strategic Management axis.”
“A what model?” Oscar asked, incredulously.
“A Corner Cube model. You can look it up in the March 1995 issue of the Project Management Journal when you have time, but for now we will use a 35% market share as ACME’s strategic target.”
Oscar was furiously writing notes as we went along.
“Got it. What’s next?”
“We will use 4.8% overall Return on Investment for our Asset Management target.”
“That’s oddly specific. How did you derive that?”
“Lindstrummer boasted that ACME had beaten Monolithic on that particular metric, and I’ve seen Monolithic’s latest prospectus, showing a 4.7% ROI.”
“That’s right! Is that why you went there, when Lindstrummer crashed Randy’s meeting?”
“Maybe.”
“This is great stuff!” Oscar exclaimed, as he continued to write notes in his notebook. “But, while we’re discussing these performance targets, what about Jane, and the PM target?”
“Good question. Tell me, Oscar, how long ago did Jane take over the Project Management Office? And, was she promoted from within, or did she come from outside ACME?”
“About six months ago, and she was promoted from within. Before we even had a formal PMO, in fact. And actually, now that you’ve asked, Lindstrummer was key in her hiring decision.”
“That explains a lot. Okay, let’s set the Project Management target at a portfolio aggregate Cost Performance Index of 1.03.”
“One oh three? That’s kind of low.”
“If it had been 1.00 or higher, without the existence of a PMO, it’s unlikely that it would have been established in the first place, especially with Lindstrummer’s approval. He could have argued against it, pointing to the fact that the portfolio was performing adequately without a PMO.”
“Yeah, that all adds up.”
“But placing that parameter too high, for the purposes of this analysis, would be unfair to Jane. One does not turn around an underperforming multi-million dollar project portfolio in six months.”
“This is so cool!” Oscar exclaimed. “I knew you were the right person for this job!”
“Well, you might not be so excited when I make this next request: I’m going to need to see Daystrom.”
Oscar’s countenance fell.
“That’s next to impossible” he relayed. “His administrative assistant, Colleen, keeps a sharp eye on who is allowed to meet with him, and she’s pretty close to Lindstrummer.”
“I see. I refer to those kinds of admins as ‘moat dragons.’”
“Yeah, well, this one is one of the most moat dragon-iest of them all.”
“Can you wrangle an invitation to some other kind of high-level meeting?”
Oscar suddenly lit up.
“Yes! I’m pretty sure I can get you into the Operations Review meeting, held every other Tuesday. The next one is next week.”
“This is key, Oscar” I began. “Is this meeting both before Daystrom is expected to make the call on the best use of the new technology, but after you can perform this data pull?”
“Yes, and yes.”
“Then we’re good to go.”
Next week: Peering Into the Corner Cube
Posted on: March 27, 2025 09:21 PM |
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