The Money Files

In this video I share 5 contract terms that you should know. Remember, this isn't legal advice (and it's good to get some of that prior to any contract) but understanding common procurement terminology will help you manage your supplier relationships more effectively.

Over the years I’ve written quite a lot about Earned Value management on this blog so I thought it was time to make an easy ‘go to’ guide that brings all of those ideas and resources together.

Here’s my round up of reads about EV: bookmark this for when you’ve got a spare hour or two to browse through! There’s something for everyone, regardless of what stage you are at in your EV journey.

Getting Started and Gaining Support

Not even sure what any of this is all about? I don’t blame you. Earned value is the area of project management I found the most confusing. There are plenty of special acronyms and formulae. If you aren’t mathematically minded it can seem like total overwhelm, but once you understand that it’s about the delivery of work in a cost effective way, it’s a lot easier to understand. This video will help.

Watch: What is EVM [Video]

If you are just getting started with earned value, this article will help you gain buy in for the idea and get senior management support for the transition you are about to make.

Read: Moving To EVM: Getting Buy In

If you already use earned value on your projects but your project sponsor is new to it, this article will help you to help them. There are some key things that they should be looking for in your EV reports and the tips here will help them know what they should be seeking out.

Read: The Questions Your Sponsor Should Be Asking About Earned Value

Understanding EVM

Once you’ve dug into EV a little you’re going to want to understand the concepts in a bit more detail. This article has four key terms that you will hear over and over again in your EV discussions.

Read: 4 Key Terms for Earned Value

Launching EVM in Your Workplace

One of the biggest struggles with EV is actually turning the idea into reality. Getting everyone to plan and track their work “the EV way” is pretty hard. Here’s an article about what it takes to launch, with some tips from Steve Wake, project controls expert extraordinaire.

Wake explains earned value as “a disciplined framework for managing work.”  His definition is:

“A project control procedure based on a structured approach to planning, cost collection and performance management. It facilitates the integration of project scope, time and cost objectives and the establishment of a baseline plan for performance measurement.”

Read: Launching EVM

A Real Example

It’s all well and good reading about it in theory, but is anyone actually using EV to do their projects? Yes, they are.

Here’s an example of a fantastic project that used Earned Value to keep the project on track: the London Olympics.

Read: Budgeting for the Olympics

Hopefully that selection will keep you in bedtime reading for a while! Is there anything else on earned value you’d like me to write for you? Let me have your ideas please…

I’ve been thinking about a webinar I’m putting together and Artificial Intelligence is on the topic list to discuss during that session.

It’s a trend that project managers and business leaders can’t afford to ignore, but it’s not yet clear to me how it will help businesses do anything particular. In other words: it’s a good theory and I can definitely see the applications, but how do I use it?

In doing some research for that webinar I’ve been digging in to AI in more detail and clarifying my thoughts.

Here’s where I am up to.

Forbes shares survey results from Narrative Science that show that by 2018, more than 60% of all companies are anticipated to use a form of AI programming to manage some aspect of their business. They also cite a study from Forrester that says despite this growth, around 40% of companies currently have no plan for how smart technology can help manage their business.

So we know it has the potential to be great, we just don’t know how to harness it.

Understanding A.I.

Smart software consists of customized algorithms designed to scan large amounts of data very quickly, displaying the output in an easy-to-understand, elegantly designed presentation. The tools don’t actually do any “thinking”; they just look like they do.

You will likely need to do some work to set the any AI programme with your existing infrastructure. But, once you do, you can reduce a formerly mundane and repetitive task to the click of a button! At least, that’s the theory.

Where are the applications, then?

Reliable Recruitment

The internet has become a double-edged sword when it comes to hiring for your team. On the one hand, the rapid communication and social media sites allow leaders to be instantly linked with highly skilled workers from all over the world, with full access to their work history, résumé, and portfolio. On the other hand, there are simply too many sites and too many candidates to possibly review them all.

Project managers and team leaders have better things to do than sift through CVs and this is where AI can help.

Organizations have begun using AI software to scan through the millions of online CVs, across dozens of social media sites, to find the skills and experience that they are looking for, leaving you more time to actually sit down and interview only the most suitable candidates.

Customer Service

You may have noticed that more and more websites now offer round the clock support on their websites. Many don’t even have any waiting time when you open a chat. Intercom does this, and there are Facebook bots that run through Messenger doing a similar job if you engage with a page, sign up to an event or similar.

 And yet...the advice you receive sounds too human to be a pre-programmed response.

Those pre-programme responses aren’t a human waiting in the wings. Chatbots are AI programmes designed to take the pressure off your customer service teams. As a replacement for first-line support, chatbots analyse a customer’s message for key words, scan a database of predefined answers, and then customise a response so lifelike that most humans can’t even tell the difference.

I think that will change in time though, as customers get used to dealing with bots and can pick them out.

Finance Management

Making sense of your project financial data is another area where AI can help. Whether it is scanning projects in the portfolio to better manage investment across the business and capitalise on projects with the most attractive profit projections, or isolating key products and departments where money is being lost, AI can help keep your leadership team ahead of the curve.

This is definitely an area where portfolio management teams should be looking out for advances. We have so much financial information trapped in our project management tools that it’s ripe for processing in an AI way.

I’m sure many project management tools will catch up but for now I’ve seen this done mainly in financial management packages, the kind your Finance team would be using. For example, Sage’s chatbot, Pegg, monitors all your accounts, your income and your expenditure, and provides real-time data as though you were texting your accountant...only Pegg responds faster.

This could be great for small project management firms like design agencies, but even bigger companies using products like this could benefit from not having to dig into the Help files every time they wanted some info. Or maybe project managers could be given access to view some of the financials relating to their projects? It would be a huge help to me when dealing with suppliers if I could use a chatbot to find out if an invoice had been paid.

So, whether you’re already using Facebook’s “Insights” to track who is interacting with your PM training page, or if your heavy machinery could benefit from a programme which tracks sensory data and automatically orders replacement parts when they are needed, AI is the means for taking all that data you’ve been collecting about your company and finally making sense of it.

Do you already use AI in your business? On your projects somehow? Let us know in the comments. You never know, you could end up as a case study in my next webinar!

Or: Who Does What When It Comes To Project KPI Reporting

So many KPIs, so little time! There are reporting requirements at every step of the project and at all points in the hierarchy. Not sure who on the team should be involved in what kind of progress tracking? Here are some pointers for who should report what. Adapt these to fit your team, but it’s a good starting point.

Team Member

They should analyse the work they have done themselves, so they’re reporting on progress made and work still to do. And time sheets, if you use them.

There’s an overlap here with skills required, so you’ll need to get them involved with upcoming planning to ensure that they are capable of doing the tasks – otherwise it will take them muhc longer and with much worse outcomes in terms of quality.

Project Manager

Project-level analysis relating to project planning and budgeting. If this is you, you’ll complete the project dashboard and summarise the project performance metrics.

Programme Manager

If this is you, you’ll be doing programme level reporting, using inputs from the project managers. As your programme is probably broken down into stages, you can report actual progress (on all the projects) against the forecasted progress for the stage. Do  this for time and budget as a minimum.

There may also be other programme level key performance metrics that you choose to track such as resource allocation across the project with a view to managing skill levels.

Portfolio Manager

The kind of thing you’re reporting on is even more rolled up than that of Programme Manager. You’re looking at analysis by the type of work carried out, progress across phases and stages of programme against forecast and juggling the budgets across the portfolio so you’ll want to know top level budget performance to feed into portfolio metrics.

Look at metrics related to time to complete work so you’re also keeping an eye of capability and performance as well as time/cost/quality of the work done.

Director/Executive

As a project sponsor, you’ll want to digest the project-level reporting from the project manager. But as a senior exec responsible for diverse portfolios, your data needs are more aligned to the governance and strategic functions you perform.

Look for metrics that analyse time for the different types of work that you have in the business. Splitting activities by runners, repeaters and strangers is a good starting point, and then you can apply the governance metrics to those.

‘Runners, repeaters and strangers’ is a Lean technique to help you know where to concentrate your efforts.

• Runners are things your team is working on all the time: normal processes and tasks you require to be completed every day. For example, the fundamental customer service processes for selling your products.
• Repeaters are the activities that you see regularly but they aren’t daily occurrences. For example, handling complaints or the change management process.
• Strangers are activities that rarely happen, like a one-off project to close down a facility and lay off 100 staff.

As an exec, look at the time/cost analysis relating to these tasks to see if the business is spending its resources wisely.

Budget cuts… this is something every project manager faces at some time in their career. Your healthy budget of whatever is suddenly subject to scrutiny because your sponsor’s department has been told to find savings of X% and all projects are at risk.

Then you find that your project has generously ‘handed back’ a sizeable amount to the corporate coffers. And yet somehow you’re still expected to carry on.

The good news is that in situations like this your project sponsor will know what has happened and should be broadly sympathetic to the idea that they can’t have everything they wanted after all. If the money isn’t there, they know you’re going to have some limitations on what you can deliver. But where do you start with that conversation?

Start With the Requirements

A closer working relationship is exactly what you should be aiming for when budgets are stretched. The more you can understand what it is your customer wants – in really granular detail – the better it is for everyone as you’ll (hopefully) be able to come up with solutions that achieve the ‘right’ outcomes in a cost-effective way.

Check that there’s nothing extra that has found its way into the scope. Check that you understand what’s expected from the contract so that you aren’t inflating or gold plating anything unnecessarily. What could you lose from scope (with everyone’s agreement) that would still end up with the customer getting broadly what they wanted?

Look at the processes and bureaucracy involved in getting the work done: often closer working relationships can strip time out of these processes and time is money, so there could be savings there.

Basically, think collaboratively about what’s possible. Lean in.

Stagger the Work

Look at what could possibly be removed from the initial scope of your project and pushed to a further delivery phase. Financial years are cyclical – there might be more money available next year to finish a particular element. Consider what parts of scope you could agree to postpone.

Small Changes Make the Difference

It’s rare that you’ll be able to make one sweeping change to your project and have all your financial issues go away. Rather, you’ll be making lots of smaller changes and tweaks across the board with a view to improving the budget position holistically.

Together, small changes really do add up. Unfortunately, identifying the right small changes and doing the planning work to incorporate lots of changes does take time. You might want to slow down progress on your project while you’re doing all this reforecasting work as you don’t want to incur additional (and perhaps unnecessary cost) at this time.

Work with your project sponsor, key suppliers and other people on the team to look at where savings could be made that would contribute to meeting the financial challenges overall.

Keep Talking

Projects move on and evolve frequently, and if you hit a problem that is going to affect the budget you should bring that to the attention of the project sponsor straight away. You should do that anyway, but in times of financial pressure and when your budget is challenged, it’s even more important to involve them in the planning and response to issues when money is at stake.

Keeping honest communication channels open is also helpful for building trust, and it ensures that you hear about changes that might affect you. For example, there might be more budget that needs to be reallocated, or you might be lucky and find that some extra cash is flowing your way.

How Much is Too Much?

In an article for PMToday Magazine way back in March 2010, John Judge explained the four stages of budget cuts, which I’ve elaborated on here:

• Budget cut by up to 15%: you can work within reasonable cost reductions across the project and hopefully minimise the impact on the project scope.
• Budget cut by 15-25%: more noticeable scope impacts with likely impact on the functionality of your end result as well.
• Budget cut by 25-35%: you’ll have to look seriously at what can be removed from scope or deprioritised, or moved into a future phase or the next financial year.
• Budget cut by >35%: consider pausing closing down the project as with this level of cuts it’s unlikely that you’ll be able to deliver effectively.

These are useful rules of thumb, but it does beg the question: if we can manage with budget cuts of up to 15%, why don’t we stretch ourselves to deliver under budget by that amount anyway?

Do you think you could cope if you lost 15% of your budget tomorrow? Let us know in the comments section!