The Money Files

Many companies use a balanced scorecard to monitor progress against a number of key business strategies or objectives. Areas on a balanced scorecard are typically things like shareholder value or growth measures, quality of service and engagement measures for both staff and customers. The scorecard could look something like this:

Each month the key measures will be rated so that the company’s performance can be measured month by month. A popular way to do this is with the red/amber/green colour coding.

Could you adapt the principle of a balanced scorecard for your project? You can change the quadrants to match the things that are important on your project, for example your key success criteria. Your project scorecard could look something like this:

The idea is to have metrics that you can measure monthly for your project. Choose metrics that you can measure easily and that won’t take you too much time to gather – you don’t want to be spending all month pulling together statistics. Ideally they metrics should mean something to the project team and your sponsor as well. The balanced scorecard layout is just an alternative way to display the information graphically.

Appropriate Contracting is a term used by Michael Cavanagh in his book Second Order Project Management (Gower, 2012). He defines it as “the application of common sense to a commercial relationship”. In other words, it’s not really about money, but it is about making sure that the contracts you enter into with suppliers are fit for purpose and will help you achieve your objectives.

Consider a project where you buy software from a vendor. You go out to tender and you receive pitches from a number of companies. You choose the cheapest. The contract is tied up, with tight clauses around payment terms and schedules. You shake hands, everyone is pleased, and the project starts.

Six months in, you realise that the project scope needs a significant change in order to be able to accommodate the needs of the users. At the time of signing the contract with the software supplier, you hadn’t finished the requirements analysis and were not exactly sure how they would be using the project’s deliverables. Now you know, and you want to change the scope.

The vendor says no.

This is an example of inappropriate contracting – where the money side of things takes so much emphasis over a trusting, working relationship where both parties are working successfully together to achieve the end goal.

A trusting relationship does not mean that you don’t have a contract at all. Of course not. You should always enter a legally binding contract with suppliers on projects, as this gives you both additional protection should the worst happen. But as Cavanagh says in his book, “major contractual issues rarely occur between parties who have long experience in dealing with each other”. Trust is built up over a long time (and this goes for project managers with their teams too – in fact trust is one of the major attributes of a good project leader).

The better your relationship with the vendor, the more likely it is that you can work effectively together. This starts with the bid process. How the vendor operates at this point will give you an insight into what they will be like to work with when the real work starts.

So what is an appropriate contract?

Cavanagh says that an appropriate contract has the following attributes:

• It establishes consensus between both parties
• It establishes consent between both parties
• It provides clarity about the intent of the project/work and reduces ambiguity
• It defines and allocates roles and responsibilities relating to the work and performance
• It agrees how the parties will work together to create trust and confidence
• It documents any processes and principles related to managing success or failure.

For this last point, any processes can be included as a contract schedule.

“First and foremost,” writes Cavanagh, “the contract should be establishing a framework for success.” He says that in order to achieve this the contract should cover these four areas:

1.      Scope and goals (what the contract is about)

2.      Responsibilities

3.      Performance indicators

4.      Rights and remedies (what happens when things go wrong and what options both parties have if performance targets are not met).

Cavanagh says that the ‘meat’ of the contract is in the first three points, but project managers (when they are involved in negotiations) and legal teams spend a lot longer on negotiating point 4. This is counter-productive. If you skip over the scope and goals, who does what, and how success will be measured, you have every chance of needing those rights and remedies because it won’t be at all clear about what the vendor is supposed to actually do. “Rather than managing the risk,” Cavanagh says, “the contracting process itself becomes a source of risk.”

How appropriate are your contracts?

As a project manager, there’s one big problem on projects – you are right in the middle of it. You have tight deadlines, unforgiving stakeholders and detailed plans. It is very hard to lift yourself up out of this and see the bigger corporate picture – many project managers can’t do this at all.

You should try.

Being able to see the bigger picture puts your project in context. It helps you operate more effectively. It helps you see what is important to your project and business customers. It makes you a better member of the company, as well as a better project manager.

Here are 5 ways to ensure that you can see the big picture.

Go to internal networking events.

Every company has them. And if, for some reason, yours doesn’t, start one. Got to lunch and learn events. Go to afternoon briefings, or drinks after work, or corporate team building days. Don’t opt out of anything. You never know who you might meet, but more importantly, what you might learn about the company’s focus. You can use this to sharpen your project’s focus to deliver what is really important to the business.

Read the annual report.

Yes, it’s boring. But it is also a great source of information about how the company operates. How does your company make money? If you sell shoes, it’s pretty obvious, but many firms have more complex ways of bringing in the cash. How will your project contribute to this? Is there a strategic thread where your project fits (or is it clear that your project is now irrelevant to the new corporate strategy?).

Read the business pages.

Follow your industry. Not project management, but the industry your company operates in – IT, construction, engineering, retail etc. What’s happening there? What are your competitors up to? Set up a Google alert for the name of your company and your CEO. How does your project fit with what your CEO talks about in the media?

Join an industry body.

In the UK, BCS, The Chartered Institute for IT, represents the interests of the IT arena. It’s not the only IT industry body, but it actually doesn’t matter which one you join. The point is to have another way to find out what’s happening in the big wide world. Read their magazines. Go to their events. Join their LinkedIn discussion groups.

Ask questions.

If you don’t know what terms like ROI, IRR, BCR and payback period, ask (or watch my videos). Talk to your managers, customers and suppliers. What is important to them? How is your project helping?

Being able to see the bigger picture lifts you out of the detail and helps you operate in a project leadership role. How do you make sure that you know what’s going on outside of your project?

I was lucky enough to get to Wimbledon this year to watch the ladies’ semi-finals, and it was only once I had arrived at the All England Lawn Tennis Club that I realised it is also the venue for the Olympic tennis.

The UK hasn’t hosted Olympic tennis since 1908, but the preparations to transform the Club into an Olympic venue are already underway. It’s a project with a short timescale, given that the Wimbledon Championships have only just finished. It gives the grounds staff and the project team only 20 days to turn the place around.

The famous green backdrops and court surrounds will be replaced by the purple branding of the 2012 Games. The grounds team will install Olympic rings where they need to go, and there is a new podium being constructed on Centre Court, ready for the winners to receive their medals.

In the programme I took away from my day trip to the AELTC, there was a short interview with Eddie Seaward, Head Groundsman. “We will soak the courts, pre-germinate the seed, and wait to see what Mother Nature throws at us,” he says in it. Luckily, Centre Court now has a retractable roof, so even if it continues to rain as much as it has over the last couple of weeks, the tennis will still go on.

The feel of the venue will no doubt be very different. For the AELTC Championships, the players wear traditional white clothes. For the Olympics, they’ll be in their national team colours. They will only use 12 courts instead of the 19 used for the Championships. This might be because the Paralympics are scheduled after the Olympics, and the wheelchair tennis is not being held at Wimbledon. During the 2 weeks of the AELTC Championships, Wimbledon hosts wheelchair tennis as well.

I think the biggest change will be in the advertising, although I haven’t been to see the redecorated Wimbledon, and I won’t be going, so this is just speculation. The AELTC has no large advertising placards. There are no McDonalds or Starbucks concessions. The shops, restaurants and cafes on site are discrete and even the corporate hospitality marquees are barely branded. I have a feeling that it won’t be like that when the Olympics comes to town. Given the way branding has been managed elsewhere in London, I imagine that the venue will be full of posters and sponsors’ adverts.

I’ll have to watch the Olympic tennis on TV to find out if I’m right, and if the transformation project was a success.

Photo: Serena Williams playing on Ladies' Semi-Finals day on Wimbledon Centre Court. Photo copyright: Elizabeth Harrin