The Money Files

Is project management a cost to be reduced or an enabler for cost reduction? This was the question asked at the Austerity Debate in London last month.  Donnie MacNicol, Director, Team Animation, presented his view.

Project management is likely to be seen as a cost to be reduced, he said, in organisations which do not have mature project management structures.  In this situation, project management is not linked to strategy and it is ineffective.  Projects delivered are not the right projects, and they don’t deliver appropriate benefits.

Project management is likely to be seen as an enabler for cost reduction in an organisation where project management as a discipline is understood and well-implemented.

The role of organisational culture

Organisational culture is a key driver for how project management is perceived in the business.  “Project management typically requires people to have a certain level of openness,” he said.  How does this work across an organisation where other departments are not like that?  It certainly makes it harder, he explained.

Culture has an impact on the PMO, which supports the organisation in achieving its strategy.  It also has an impact on how well this strategy is articulated.  Getting the strategy implemented isn’t something we can spend too much time on now, he explained.  We’re now in a position where we have to make large scale changes using a directive style – because we have to change things quickly.  In a time of austerity, organisations need to be responsive and flexible, and that means implementing and adopting change speedily.

He also explained that how we brand the project, programme and portfolio management internally has a big impact on its success.  “Do you understand your organisational culture and the impact it has?” he asked. 

The vote

Attendees at the austerity debate were asked to vote on whether project management is a cost to be reduced or an enable for cost reduction.  Some people put their hands up to show they thought it was a cost to be reduced.  However, many of them also put their hands up to show it was an enabler for cost reduction too.  Overall, the ‘enabler’ opinion won out, with the majority of people thinking that project management facilitates cost saving in companies.

Project management is an enabler, but I think that those people who voted for it to be both an enabler and a cost to be reduced had it right.  It is both those things.  We need to be delivering projects in a cost-effective way.  We should be looking at the cost of project management and working out how we can best make savings to make the PMO (or P3O) as efficient as possible.  Only then can we really use project management as an enabler for cost reduction in the enterprise.
 

Andy Murray, Director of Outperform, and lead author of PRINCE2:2009, spoke at the Austerity Debate at Lloyd’s Register in London recently about the role project management plays in this difficult economy.

When times are tough, senior management look to reduce costs and that sometimes means cutting projects and project management.  So how much does project management cost?  Murray explained that there several ways to look at this question.

The cost of managing a project

Each project has an overhead, including the cost of the project manager, the sponsor, a risk budget, the project board and any project support services.

The cost of failure

What does it cost if you don’t do projects well?  There’s rework, the cost of overruns, poor outputs, under-delivery, consequential loss, and benefits that remain unrealised.

The cost of managing projects

This is the infrastructure related to managing projects and includes any Centre of Excellence overheads, the PMO, support, monitoring, tools, evaluation, assurance, the Portfolio Office and audits.

Reducing these costs is possible, Murray explained.  He presented several options that senior managers could consider:

• Reducing the number of projects
• Reducing the cost of managing a project – giving each project manager more projects to run, for example
• Reducing the cost of managing projects but minimising the central overheads
• Reducing the cost of failure
• Improving performance with better targets and delivering more benefits.

Murray said that the contribution project management offers is a mix of the value of increased performance, plus a reduced cost of failure and a lower cost projects, less the cost of project management itself.  I’ve represented this as a sum in the picture here.

In the last decade the focus has been on methods, training and techniques, Murray said.  There’s been no focus on behaviour, although he admitted that things have been looking up over the past three years.  There’s been a bit of development in the organisational space around P3O and strategic planning, but he believes we can do better.

What do you think?
 

“When you’re in content focus, you load a project into your brain and do everything related to that project,” says Stever Robbins, in his book Get-It-Done Guy’s 9 Steps to Work Less and Do More.  “If you’re writing a report in content focus mode, you might spend the day writing, researching, calling people strictly about the report topic, brainstorming and editing.  Even though you’re doing lots of different stuff, it’s all so deeply related that your brain can stay with that project for the whole day.”

Do you do that?  Pick a project and work on it with the focus it deserves?  This is one of Robbins’ many tips for working smarter.  He then talks about task focus, which is grouping together tasks that require the same skills, such as returning all your calls, shopping, emptying your inbox and so on.

This book is funny, and if you struggle with time management - and making the most of the hours in the day - you won’t find it difficult to dedicate the time required to read it.  It’s a normal sized paperback, with over 200 pages, all filled with useful advice for people struggling to get things done in the normal working day.  One of the most radical ideas in the book is from the CEO who charges her team $5 from their budget for each email she receives from them.  “[T]he overload has gone down, the relevance of emails has gone up, and the senders are happy, too, because the added thought often results in their solving more problems on their own,” he writes.

One of the other useful tips about dealing with email is to delete everything, then go into your Deleted Items folder and rescue emails.  There’s a different mental approach to rescuing things that have already been deleted.  Your brain can be more picky about the things it really has to deal with.  I think this is a great suggestion, although I keep my inbox at under 100 messages most of the time, so I’m happy with the way I handle emails. Still, if it ever gets too much, this is a great way to sift out what’s really important.

Robbins also presents a very mature response to dealing with awkward people who never do what they say they will:

"If your job requires paper, Billy’s job is to reorder paper, and Billy never reorders.  You can waste hours being upset, blaming Billy.  It won’t help; blocking your paper order is Billy’s unconscious attempt to wrestle a tiny bit of power over an otherwise miserable life… You’re best choice is to take full responsibility and find other solutions… It would be easier if you could count on Billy, but you can’t. You can, however, take responsibility and do what it takes to help Billy succeed so you can get your job done faster."

This is the concept of radical responsibility that Nick McCormick covers in his book, Acting Up Brings Everyone Down.

Get-It-Done Guy’s 9 Steps to Work Less and Do More (aff) is more than just another book about time management. It’s an entertaining read, and it’s definitely going to show you some new ways to be more productive at work by focusing on the right things and doing them right.

Inspired by this blog post [link removed] about fun ways of doing day to day things, several bloggers have come together to run a competition to capture the best ideas for having more fun in project management. 

They need your ideas to for having more fun in project management. There are prizes on offer including

1. A copy of the Lazy Project Manager from Peter Taylor, @thelazypm
2. A free project management distance learnng course from @paralleprojecttraining
3. €10 from Jacques Dunselman, @pmflying

Submit your ideas here. [link removed]  The best idea will be judged in the best traditions of TV dance competition, as they say, by:

• The Public Vote (50%)
• Jury of @paralleprojecttraining, @pmflying and @thelazypm

The closing date is the end of December 2010 and the prizes will be awarded early in the new year.  Why is this relevant to The Money Files?  Well, it's always nice to have the opportunity for free things!

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Want a new job?  The growth areas for new jobs are outsourcing, business transformation programmes, shared services and offshoring, according to Wellingtone Project Management.

Vince Hines from Wellingtone Project Management summarises the state of the PM recruitment world every so often, and his latest update shows that people are still hiring staff for project work.  I’m not at all surprised by the outsourcing and offshoring comments – I spoke about the impact of the economic downturn and the increase we’d see in these types of projects at the APM conference in 2008.

Many large organizations kicked off business transformation efforts as a result of the recession, and they are now part way through their programmes.  If your organization is doing this, and you have the chance to get involved, Hines recommends that this would be a “good career move”.

He says:

Cost reduction and efficiency improvements are, perhaps not surprisingly, strong areas for project growth... Equally other areas of particular interest within the project management industry include:

• Recognising need to improve project selection & Portfolio Management
• Demand for improved resource management
• Drive to establishing / developing PMO capability to leverage benefits

However, Hines reports that confidence overall is reducing.  August was a busy month, but things are tailing off now as we get closer to the end of the year.  The total number of employers who have declared themselves out of the running for new hires through recruitment freezes has risen from 30% to 37%.  Hines thinks that we’ll see this level of cautiousness for quite some time.

So, in a climate where we’re seeing more people put the brakes on recruiting at all, how can you make yourself as hire-able as possible?  Companies have realised (finally!) that project selection is a key area in getting return on investment for their projects.  Pick the right projects, and you’ll get the benefits.  Pick any old project, and your company could spend a lot of money doing something that won’t really make that much difference.  Project managers and PMO staff who understand the business case process, can identify benefits and compare projects will be in demand. 

Hines also believes that companies want to manage their people more effectively.  Project managers who can people-manage as well as project manage will also be sought after.  Resource leveling and resource forecasting, combined with predicting how projects in the pipeline will change the demand for project and other staff in the future, are also key skills to highlight on your application.

Unsurprisingly, all this boils down to is that project managers who have kept up to date with the way in which the world has changed as a result of their not being lots of money to slosh around on failing projects, and who are highly skilled, personable, and able to help their businesses achieve the corporate objectives, will be targeted by recruiters.  If that sounds like you, good luck with your job hunting – there’s a job out there for you.  If it doesn’t sound like you, what are you going to do to improve your chances?