The Money Files

Here in the UK we’re well into the summer now. It’s hot enough for me to be grateful for the air conditioning unit that was fitted in my garden office a few years back. But air con isn’t exactly the most sustainable of gadgets given the energy that it uses to keep my space cool.

I’ve been thinking of how our projects can be more sustainable through the way we deliver them. Here are 7 suggestions for how we can build sustainable practices into project management through working with suppliers.

1. Delivery methods

How does the supplier’s product get to you? Consider prioritising suppliers who have low-pollution delivery options.

2. Packaging

How much plastic is involved in packaging goods? Talk to your vendors about how they ship materials. They might be investing in smart packaging options or using more cardboard to wrap goods.

3. Sustainable materials

This is quite a simple one: ask vendors how they choose what materials go into their products. This is important for equipment that uses minerals or other materials that have a limited supply. They may be investing in changing up what they use so their products have a lower environmental impact

4. Manufacturing environment

Find out where the vendor is manufacturing their goods. Many of the manufacturers I work with are investing in their production line and factories to introduce things like motion activated low energy lighting, low water options or recycling waste water, paper recycling and more on their journey to carbon zero. 

5. Staff engagement

One of the vendors I am working with at the moment puts a lot of effort into engaging staff in environmental awareness, and you may find your vendors do the same. For example, they have recycling on site for staff to bring their personal home recycling, they do awareness weeks and promotions for staff and more.

6. Training delivery

If your team needs to be trained on how to use the equipment you are buying, consider how that training will be delivered. There is probably a lower carbon footprint for online training delivery than having a trainer fly to your location and deliver in-person training. Consider what your options are and work with your supplier to come up with something that meets your needs.

7. Compliance

There are several schemes applicable to vendors nationally and internationally, for example in the use of conflict-free minerals. Check out what schemes are relevant to your purchasing and whether your vendors are taking part.

Plenty has been written on this subject already, and I’ve only touched on each of these areas. Hopefully you’ve already got some sustainability approaches baked into the way you consider, select and deliver projects, and have a focus on sustainability in your procurement plans. If you need some ideas, check out PMI’s ESG report. What are your top tips in this area? Let me know in the comments!

In this part of my occasional series on program cost management, inspired by The Standard for Program Management (Fourth Edition), I’m talking about 9 financial management tasks that you should expect to do as a program manager.

1. Identifying changes

First up, be aware of what might be coming over the horizon to influence the budget baseline and what factors are leading to changes. This is basically being aware of what might create a change so you can be on the look out for any changes. It’s proactive listening and always considering what a course of action might do to your budget.

2. Monitoring for impacts

Part of the daily work of a program manager is keeping your eye out for any environmental factors that might impact the program overall, and budget changes are part of that. These could be environmental factors like changes in regulation, access to skilled resources from the local hiring pool, or access to the right technology – anything that could have an impact on the budget.

3. Managing changes

What happens after you scout the horizon for things that might change your program budget? You find things. Part of a program manager’s tasks is to manage those changes. The change could be to scope, to the schedule, to the resource profile, procurement plan, or anything else, and we have to play back what impact that is going to have on the budget and build in the changes.

4. Monitoring cross-project impacts

As I mentioned in my last article, part of my role as a program manager is being able to shift funds between pots to ensure the overall program goals are met. That’s what this task is all about: monitoring the impact of what happens when costs are reallocated and making sure that overall the program components are balanced – or at least as balanced as they can be.

I mentioned cross-project impacts in the heading, but programs often include an element of BAU work and that can just as easily be affected by changes.

5. Monitoring supplier contracts

Some suppliers might be contracted at a program level, so it’s the program manager’s job to ensure that suppliers get paid in line with their contracts. With one supplier I worked with, we had contractual milestones in place. When each milestone was reached, another stage payment was due.

Part of my work was ensuring Finance was aware that a stage payment was due so they could have the right amount in the bank accounts ready to pay when the time came.

6. Earned Value Management tasks

If your program uses earned value management, you will work with control account owners, project managers and other experts on the team to make sure EV practices are implemented and adhered to. Part of the role will also be making sure everyone can interpret the outputs of EV reports and manages their part of the schedule accordingly.

7. Dealing with over and underruns

It’s unlikely that your program will be perfectly on budget every month because that would rely on your estimates being perfect and no ‘real life’ happening during the work. It’s more likely that you’ll be a bit under or a bit over.

Part of the program manager’s role is to manage within that tolerance and to advise and support project managers on the program to do the same.

8. Working with stakeholders

Another big part of program management is communication and engagement with stakeholders around changes. The sponsor, customer, client and governance groups (including auditors) need to have access to transparent information around the program’s financial measures. You have to provide that.

9. Managing within tolerance

Finally, the main, most obvious part of the role is to manage the program’s spending within the levels expected. You may have set tolerance at individual component level, or there may be other ways you are managing to within the expected parameters. These should be clear, so everyone knows how the work is being tracked.

And, if you spot that you are not managing within the parameters and boundaries set, then as the program manager it’s your role to take steps to get back on track, whatever those actions might look like.

The Standard for Program Management (Fourth Edition) talks about how to track program financial metrics once your financial management plan is up and running. I thought it would be worth comparing the guidance to what I’ve done as a program manager to see how I measure up – and you can compare your own practice to what’s in the Standard too.

Program financial management, as a refresher, is defined in the Standard as:

Activities related to identifying the program’s financial sources and resources, integrating the budgets of the program components, developing the overall budget for the program, and controlling costs during the program.

Once you’ve got the program going, your work as a program manager shifts to tracking the money and making sure you are on track.

Spoiler alert: I’ve never used earned value to do this in real life, although I’m well aware of the benefits of doing so on projects and programs.

I think the techniques you use for tracking very much rely on your organisational culture and maturity levels, and I’ve not worked anywhere where EV is considered part of the way things were done. If you’ve got experience working in an EV environment, let me know how that goes in the comments.

The program manager’s role shifts to monitoring spending and controlling spending, ensuring what is being paid out is in line with the budget. In my experience, as a program manager, I’ve had a fair amount of latitude to move money between ‘pots’ (or projects) to ensure the overall goals of the program are met. And I have to say, I’ve enjoyed being able to make those decisions.

What I haven’t enjoyed is the financial scrutiny. I know we need governance on programs, and I’m all for it, but sitting in a meeting having to present the numbers has always been uncomfortable for me. Not because I don’t believe in the numbers, but because I’m normally presenting to people with an accounting background and honestly they could dance rings around me if they wanted to pick holes in my maths. So I have to put extra effort into making sure I can justify how numbers are put together.

My top tip is to make sure you keep detailed records of how you came to land on certain figures. For example, on a program I’m working on at the moment, we track committed spend, forecast and then actual “out-the-door” spend. But there are a couple of other strands within the program that are accounted for separately (don’t ask, it’s just the way it works best) so I have to make sure I’m clear as to what’s in and what’s out of the numbers so I can justify them every month and make sure we are reporting to the PMO on a consistent basis.

Because trust me, if I didn’t, I’d forget from month to month what the basis of calculation was and report something that wasn’t internally consistent and that I couldn’t justify reliably. Which would be bad.

Governance serves a purpose: it makes sure that a program is operating within approved cost limits and challenges programs that are forecasted to go out of those budget targets. Then the organisation can decide if it wants to continue with the program or not.

I’ve luckily never worked on a program that has been cancelled because of financial issues – but I imagine that is largely luck and the kind of programs I have been involved with rather than any skilful cost management on my part.

My experience of program cost management has been very similar to managing large project budgets: the skills are the same, and business acumen comes into play too. I think that having the bigger picture and goals in mind helps. What do you think?

In my next article, I’ll look at some typical financial management activities as outlined in the Standard and talk a bit more about those.

Last month, I looked at 3 areas where project managers can mentor and support their team members: risk management, task management, and managing multiple projects. Today I’m looking at 3 more areas where I know people struggle – and where project managers are uniquely placed to be able to help them do a better job.

1. Managing scope

Project scope changes regularly – we all know that having a change management process in place is good project management practice. But dealing with constant changes is hard work for the team, even if the right process is followed.

Address this by:

• Make sure they know what the process is and that changes are likely to happen.
• Build resilience. For example, talk together about what the impact of changes is going to be before you get a change.
• Be clear on what is a change and what is a normal evolution. For example, some small document or schedule changes don’t need to go through change control if they don’t have any real impact. Just do them.
• Keep boundaries: Don’t say yes to everything, and be prepared to push back on change requests if necessary.

2. Scheduling

Project scheduling is more than simply putting tasks in a list. It’s about managing dependencies and the resources to do the work. It’s understanding how to crash the schedule when you need to save some time and what risks that presents to your projects.

As a project manager, you’ve got a great set of skills to help others on the team understand how to schedule their own work. If they aren’t confident at scheduling you can coach them through it.

Address this by:

Help them use the right tools. You can’t build out a schedule in Excel, not a proper one. Get them access to the right software and show them how to use it.

Understand the flow of the project and what has to happen in what order. Help them understand the dependencies and the different ways tasks link to each other.

Make sure estimates are accurate so they are scheduling with data that’s actually going to stand up.

3. Budget planning

In my experience, project managers tend to worry about handling the financial aspects of projects, and that isn’t necessary. If you manage your household budget, the principles are pretty similar! It has also been my experience that we are expected to pick it up as we go. I don’t think I’ve ever had any specific, company-relevant training on how to work with Finance and do project budgeting.

However, junior colleagues or those who haven’t had to manage big numbers before might need a confidence boost and some support with this skill. Especially if they are in the same situation of never having been shown how to do this before.

Address this by:

• Helping them understand the workings of Finance. Get to grips with what the budget process is so you can share the information.
• Understand the calendar for Finance, for example, when year end falls and when quarterly forecasting happens. Then they can provide the right information at the right time.
• Get them set up with the right templates and support. Link them up with colleagues in Finance who can advise.

There are lots of ways we can help colleagues and mentor them; these are just 3 areas that I find come up time and time again. What about you? What do you get asked about the most? Let me know in the comments!

James Lea, founder of Project Science, spoke at EVA 26 earlier this year. He talked about the psychology of estimating. “People,” he said, “are just as important as the techniques and data.”

He went on: “Plans and estimates are built by and used by people. Psychology matters.”

The talk was very interesting, and here’s what I took from it.

He started by asking us our experiences of estimating and the emotional responses we had at the time. Think about your own experience of estimating. Did you feel:

• Under pressure?
• Worried about how the numbers would be used?
• Unsupported by colleagues
• Unsure what the estimate was for?

That’s all (unfortunately) normal, and we all nodded along as he talked.

Challenge how will estimates be used

James talked about how we should challenge how estimates should be used. “Uncertainty drives variable reactions in our teams,” he said. “It drives emotions and responses.” If you are open about how estimates are going to be used and how they should be used, that can help people feel more comfortable with the process.

Make estimating positive

How can we enable our teams to experience planning and estimating as a positive, creative experience? Instead of the stressful, “I suppose I can give you a number,” experience that it is mostly?

It’s hard for an organisation to accept that it doesn’t know the answer, and that can sometimes lead to a poor experience of the estimating process for the people involved.

Here are some ways he suggested we could turn the experience into a positive one:

• Develop the models
• Turn the work of an individual into the work of a team with reviews
• Use the past as a guide to future performance
• Frame everything as a change
• Refine the estimates.

Creating a route to predict the future

James talked about asking the question about whether we have a route to predict whether the estimate is a robust one or not. We need to understand what is in and out of our control. Where things are out of our control, accept that and track it.

Estimates are only a guess without a map of how you got there and a set of viable routes.

We often hear that people can’t estimate where there is no historical data. Well, data science should make it easier now to estimate from past performance and the vast tracts of data we store about projects. If leaders can give teams the data, in a way that helps with estimating, that should make our estimates better.

Building defensible plans

James talked about showing your workings and documenting the bases of estimates. Steve Wake, the conference chair, shared his thoughts too, namely that the audit office regularly says people don’t know the basis of estimate and therefore the best ‘proof’ that your estimates are good is that you can justify them.

He talked about bounding your plans carefully, describing the world around the estimate as well as the estimate itself to provide rigour.

He suggested we quantify and compare with data science, applying risk appetite to the delivery methodology to round out what we know.

That, and the other points discussed, are ways to shape the emotional response and create a safe space for people to estimate their work.

What do you think? Let me know in the comments below.