The Money Files

In my last video, I talked about the cost of change. Today, I’m going to talk about the cost of metrics. That said, how much did it actually cost you to gather information about your project?

Now, project managers like metrics and I do because they are very useful for monitoring your project, controlling your project and diagnosing potential problems. So metrics can give you early warning of trends that show that there is a problem on the project that needs to be corrected. Those, they give you the control that you need because they can set boundaries around tolerance levels and they allow you to monitor progress effectively.

So metrics are good but you have to make sure that the amount of time you are spending on gathering that data actually is worth it for the value that you’re getting from those numbers.

Now in this book “Results without Authority,” Tom Kendrick writes “All diagnostic metrics even those you intend to collect only infrequently have an ongoing cost.” He says, “Select your metrics carefully choosing ones that provide useful data that you can use to guide and control your project without inappropriate cost or high potential for needlessly annoying your team.” And that’s something else to consider - not just the cost of actually the time and effort that it takes to gather that piece of project data that the amount of good will that you are eroding by continually badgering your team for information about progress, numbers, data on a regular basis especially if they cannot see that they are going anywhere. And that really is the hidden cost of gathering metrics.

Metrics do have a very valuable place in the world of projects but you do need to weigh that against the two different aspects of costs. Financially, how much is it costing you to gather them and on a good will basis, how much is it costing you in relying on the team to continually gather information?

The 2012 Arras People Project Management Benchmark Report is out - the 7th annual study of the project management industry that the company has produced. The company surveyed over 2000 project professionals, mostly UK based. This year, there were some interesting results reported around budgets and salaries.

What's your budget?

Nearly a third of project managers are responsible for budgets between £1m and £5m, which is the category that had the highest response rate. Programme managers manage the larger budgets, with 37% managing between £1m and £5m and 29% having a budget of over £5m.

Contractors have responsibility for larger budgets than employed project managers, which surprised me. They also typically have more staff working for them - again, I found this surprising. It shows that contractors aren't just brought in to fill recruitment gaps but to take the lead on significant change initiatives with significant spans of control.

How much do you earn?

The survey looked at salary movements. 83% of respondents reported that their salary increased by less than inflation in 2011 - a virtual pay cut. Unsurprisingly, the public sector was the worst hit, since the pay freeze was announced. Over 60% of public sector workers reported that their salary hadn't changed, compared to under a third of private sector project workers. The average salaries were:

•   Project manager: £43,762

•   Programme Office and Portfolio managers: £57,560

•   Programme manager: £58,788

•   PPM Consultant: £67,237 (and 46% of them feel worse off than they did last year)

For mid-range salaried jobs, the public sector is the place to be. Many more employees earn in the £35k to £50k range than in the private sector. If you want to earn more than about £55k, move to the private sector - that's where the higher paid jobs are.

If you get a bonus at all, it's likely to be up to 8% of salary according to the survey. Only 2% of people receive over 25% of salary as a bonus, so if you fall into that category, consider yourself lucky.

Contractor day rates also took a dive, especially at the lower end of the pay scale. Where day rates were already low, it looks like hiring managers have squeezed them even further.

What's next for salaries in 2012?

The experts at Arras are expecting it to be another tough year for the public sector. 95% of public sector survey respondents are predicting no change or less than inflationary change in the coming 12 months.

Private sector workers are expected to fare better. Nearly two thirds of project professionals are expecting to get a rise this year. Arras is predicting that there won't be huge increases (for huge read over 5%) but that salaries will increase this year.

21% of contractors are predicting that their rates will decrease over the next year - not good for those already suffering the effects of rate declines in 2011.

So in summary, 2011 was tough and 2012 is likely to be a little bit better, but not much. However, project and programme work still remains well-paid and sought after, so it is still a good employment sector to be in.

How do you think salaries and bonuses will evolve in your country over the next year?

Last time I wrote about the 7 C’s of social media. There is one more C. It’s not strictly a social media guiding principle, but it’s aligned. Have you worked it out from the picture? It’s Cloud.

Cloud computing is the delivery of infrastructure, an operating platform and software delivered over the internet as a service.  You can buy storage space, platforms to build your own applications or access to software applications.  The latter is often called Software as a Service (SaaS). 

Lots of vendors are using this model to deliver software, and you can read some reviews of project management software on my blog, A Girl’s Guide to Project Management. The more upscale the tool – software designed to be used by professional, trained project managers – the more likely it is to have an on-site hosted option. Many of these products also have cloud versions for use by smaller companies or those who don’t want to invest.

Clouds with benefits

That’s the good thing about cloud computing: it means that companies don’t have to invest in data centres or massive server rooms, and they can avoid the cost of having to buy, host and maintain software themselves. If your organisation gets busier, you pay your cloud computing supplier a bit more money and they scale up the solution for you to cope with the demand. If you have fewer projects to run, you can scale it down. It’s very flexible, and system upgrades tend to be implemented immediately. It also has a low capital outlay, which can be a huge selling point if you are trying to convince your management team to invest in a social media tool for your project. You won’t be left tied in to ongoing contracts or with expensive servers sitting idle.

The downside of clouds

However, you don’t own perpetual rights to the software. If your internet link goes down or the vendor is doing routine maintenance, you can’t access your project files. And if you decide to move to another tool later it can be awkward to migrate all your data.

There is also the security question: where is your data actually being stored and who can get at it? If you work on projects in the government or healthcare arena you may be prevented from moving project files to the cloud.

Cloud computing solutions have also been criticised for not being ‘green’, meaning that they are energy hungry server farms with a high carbon footprint.  If this is a concern for you and your organisation, research the hosting company fully before committing to doing business with them.

Do you use the cloud for your project management software? I’d be interested to learn more about your experiences, so let me know in the comments.

Do you use a wiki at work? Do you have a LinkedIn profile for connecting with work colleagues? If so, you’re using social media professionally. In this post, I wanted to get back to basics and explain how social media works. Social media tools work because everyone (with a few tiny exceptions) follows these seven guiding principles that form the basis for the structure of the social media space:

• Community
• Collaboration
• Communication
• Constraints
• Connectivity
• Channels
• Content

Let me elaborate.

Community

When groups of people come together with a common objective, you end up with a sense of community, almost by default, like this community at Gantthead. You get a sense of community because people can interact with each other. The web enables us to do that – through forums, star ratings, collecting badges, leaving comments etc – more than any other form of media.

The internet allows groups of like-minded people to come together, and project managers can tap into this.  After all, your project team is like-minded, with a common objective:  to deliver your project.

Collaboration

Collaboration is the foundation which all social media tools are built on:  the fact that people want to work together. If people don’t share, there isn’t much to see online. Many websites (again, like this one) draw on the collective knowledge of experts who are sharing their skills.

And it no longer matters where you are based. Technology makes it possible to work across time zones, languages (hurrah for Bablefish!), and with people you have never met. Suddenly, working with project team members in other countries seems possible.

Communication

Communication and collaboration go hand in hand. If collaboration is the multi-faceted linking between groups of people with common interests, then communication is a more of a one-way version of the same thing.

Your team may be very collaborative, but there will always be times when you need to tell them something, for example sharing the project board report or to update them on a change of company policy.

Communication also needs to be honest and transparent. You’d expect that with any form of communication, but one of the underlying principles of the web is that you don’t share misinformation deliberately.

Constraints

As much as many managers would like to believe it, online is not a place where it’s a free for all. Just as in the office, online there are expectations for behaviour, such as not TYPING IN CAPITALS (can you hear me?).  Don’t say things to people online that you would not feel comfortable saying to their face: instant messaging for work might be good but that style of communication could slip into unprofessionalism easily if you are not constantly aware of your communication style.

Constraints and good practice around how to interact with other people online have been consolidated into what is called netiquette – manners for internet users.

Connectivity

Duh. Social media tools work best when you are connected to others online! Lucky for us we now have smart phones.

Channels

A channel is just a word to describe the way information gets delivered.  As a project manager, you need to decide what channels – technologies, software tools, platforms, hardware – you are going to use.  Different channels work well for different types of content, so if you want to share photos, you’ll choose a different channel to if you want to get people working on the same document at the same time.

Content

If you read websites about social media marketing or personal branding, you’ll hear experts go on and on about content. It’s what you share online. While some of your project information may not be the most interesting in the world, it is still useful to your audience. But if your project team stops finding the project blog or the wiki useful, then they will stop visiting the site.

In this instalment of Ask the Experts I talk to Jon Swain, President of Virginia Beach-based firm Ten Six Consulting. Ten Six specialises in enterprise project management tool deployment, so I talked to Jon about what these products can do and how they can help project managers work more effectively.

Jon, when I think of enterprise project management tools, I think of scheduling. What else can they do?

There are many features that take EPM tools beyond just scheduling. At a high level, EPM tools offer a centralized repository with all of an organization's project information in one place.This is coupled with a role-based security structure that allows an individual access to only what their role needs. Because you can centrally control the environment, you can enforce process disciplines. For example, take baselines. Baseline discipline is sometimes difficult to achieve with standalone tools as the project can re-baselined at any time without a formal process to control that. In EPM tools, you can better control the schedule from being informally baselined.

With everything in one place, senior management can see up-to-date project performance data across the whole organization allowing them to better manage their project portfolios. They can proactively choose which projects to select, prioritize projects particularly with competing or scarce resources, understand the interactions between projects and tie all of these decisions directly back to the company's strategy and goals.

So portfolio management is a big chunk of it. How do they fit into the rest of the systems in use?

It's not uncommon for EPM tools to be integrated with other enterprise systems including HR and accounting. Two very simple examples of these include allowing the synchronizing of resources from an HR system and the collecting of actuals costs from an accounting system. A project manager can not only plan and profile their budget, but accurately track project spending by collecting actual costs from these systems. This gives you a complete picture of your project finances. This kind of integration and information sharing at the enterprise level are benefits that stand-alone implementations of project management tools can’t easily match.

In addition, collaboration is available with many of the EPM tools today emphasizing the importance of collaborating and communicating to improve productivity and drive project success. These capabilities can enable the better management and sharing of project artifacts.

It would be remiss of me not to mention the tool vendors embracing web-based technologies. Having all this functionality in a tool suite that is now 100% web-based, makes it far easier from an IT perspective to deploy and manage large numbers of users.

That sounds great, but expensive. How do they pay back?

Many organizations that are not using EPM tools often have no way of measuring organizational project performance with empirical data, resulting in subjective assessments that can be misleading.

By way of example, a successful deployment across a 'green field' IT organization of say, a thousand staff, can yield millions of dollars in savings. These savings can come from improved project selection, removal of duplicate effort, better utilization of resources on the right projects, improved project delivery and reduction of project risk, to name just a few. These are fantastic benefits that any company could and should enjoy.

Also, learning from past project performance increases the likelihood of better estimating on future work. Building on past project successes helps create best practice templates that can be reused time and again. It's a cycle that naturally drives continuous project management improvement over time.

The customers in which Ten Six have successfully implemented EPM tools are reaping huge benefits and often have an improved organizational culture with a motivated staff that is focused and all pulling in the same direction.

I imagine you can get a lot of reports out of these systems. How does good reporting help a project manager make their project more successful?

Reporting plays a big part in supporting the project manager. EPM tools provide real-time information on the status of their project, which is presented in the format and style that they need to make decisions. These reporting capabilities can be extended using third party reporting tools, allowing complete customization of report formats and the ability to include information from other systems.

Getting the right data out of these tools is no longer the only priority; great graphical presentation in specific formats for different roles including senior management has become just as important. Web-based dashboards also play a large role in supporting both project managers and senior management in their decision making process.

I'm convinced. Is the next step to pick a tool?

There are three elements that are often talked about when implementing EPM: first tools, second processes and third people. Most organizations that are implementing EPM tools for the first time focus on these three things in that order.

In our experience, they should reverse the order to get better results faster. In other words, implementing the tool is typically the least of your challenges. Cultural issues, change management and user adoption are the challenges that need to be overcome to ensure a successful EPM tool implementation. So, if the priority were people, process and then tools, more emphasis, money and effort would be spent dealing with these “soft” issues that can slow down or even stall an EPM implementation, ironically making the implementation more expensive!

Thanks, Jon!