Relevance: The Ultimate Power Skill

 

GTIM Nation knows of my oft-repeated axiom, that, in order for any Management Information System (MIS) to add value, it must have the following three characteristics:

• It must be accurate. Inaccurate data or information is worse than useless, since it can easily lead to the exactly wrong managerial response.
• It must be timely. Old data or information is similarly risky to predicate decisions in the here-and-now.
• Finally, it must be relevant.

For those readers who see that last bullet and think, “Well, of course! Why is Michael pretending that this is some sort of insight?”, I can tell you in full confidence that the ability to discern which information streams are relevant, and which are not, is rare. And I can prove it.

Exhibit A has to be the very existence of so many irrelevant MISs. On several occasions in my career I’ve had to argue against the practice of substituting spend variances (Budget – Actual Costs) for valid Cost Variances (Earned Value amount – Actual Costs). It seems that every time I was drawn in to these discussions, the spend variance advocates were poring over Projects’ basis of estimate (BOE) at the line-item level, then comparing that to the general ledger’s costs at the same level, and then deluding themselves into believing that every time they came across a significant delta, it represented an “Aha!” moment. I would then propose the following mental exercise: Imagine you are the PM of a Project that originally budgeted $250K (USD) for labor, and $750K in heavy equipment. At the Project’s completion, they actually spent $500K in labor, and $400K in heavy equipment. Wouldn’t the spend variance indicate a severe overrun in labor costs, likely for the whole period of performance? And wouldn’t that be the wrong indicator of cost performance, since the Project actually finished with an underrun?

So, in the evaluation of Project performance, the spend variance is a bad information stream. Consider, though, that it meets two of my criteria, in that it’s usually available immediately after the accounting period has closed, meaning that it’s timely, and the arithmetic is fairly straight-forward, meaning that it’s accurate. The only element missing, the only one that renders the spend variance unusable as a performance indicator, is its relevance. As an aside, I was looking through my old accounting texts, and the only place I found where even the Asset Managers use the spend variance is when they’re calculating depreciation. For non-PMs who may be reading this, depreciation has absolutely nothing to do with Project Management.

Exhibit B has to do with the scarcity principle. Management Information Systems aren’t free, and they’re rarely cheap, especially the valid ones. I recall a conversation with a so-called Project Controls Manager, who was advocating for the aforementioned spending-variance-at-an-absurdly-detailed level report. After proposing the also aforementioned mental exercise, and his having no rational response, he resorted to asking “why wouldn’t anyone want to know this?” In my mind, the answer was so obvious that it might have actually attained mass, but I articulated it anyway. “Management Information Systems require time and energy, to collect the data, process the data into information, and deliver that information to the decision-makers. That’s time and energy that could be spent on relevant information streams, instead being wasted on … this.”

Next, I’ll just say this out loud: unless you are running for political office or awaiting a jury verdict, polls are irrelevant. Nevertheless, many MISs which are essentially polls will masquerade as legitimate, while they are anything but. Valid MISs all have the same basic architecture, delineated in the previous paragraph: data is collected based on a certain discipline; it is then processed into usable information using a specific process (for PM Types, this is usually Earned Value or Critical Path methodologies); it is then presented to the decision-makers in a format that they can readily understand. Polls, on the other hand, have an architecture that looks like a spider. They are basically a central data repository, surrounded by input/output nodes. Almost anybody can provide input, and almost anybody can extract data opinions from this repository. The problem with polls, though, is that somebody always has more recent or more accurate data, meaning that, in the MIS sense, they are utterly unreliable.  

Finally, I want to address that King of the Irrelevant MISs, risk management (no initial caps). What should the PM’s response be when their risk manager informs them that there is a 32.6% chance that a significant injury will occur on their Project in the next six months? Besides the obvious questions (How did you arrive at that figure? How do you know it’s not 32.3%, or 32.8%? Can you possibly narrow down the date range, or specify a location?), what action, immediate or future, is being recommended by this “information?” I believe that, since this “information” is not actionable, it’s straight-up irrelevant.

PMs in general, and PMO Directors in particular, would be well-served to develop a sense of detecting relevancy in their information streams, so as to best choose among the various Management Information Systems vying for establishment and maintenance. Once you have developed the Relevancy Power Skill (RPS), feel free to use it – your Project’s (and portfolio’s) success may very well depend on it.