The Money Files

I’ve held on to Business Case Essentials: A Guide to Structure and Content by Marty J. Schmidt for quite some time, so apologies to the author for taking so long to review it.  The reason it’s taken a while is because I’ve been using it.

The book started life as a white paper in 1998 and has grown to book size over the years in response to requests from Schmidt’s consulting clients.  The author’s aim is to provide a step-by-step guide for building a business case.

Project managers sometimes get involved in the analysis that goes into working out if a project is worth doing or not, and that’s where the business case comes in.  The book is set out logically, and is very pragmatic:

“A successful business case meets these criteria:

• Credibility: The case is believed.
• Practical value: It enables decision makers and planners to act with confidence.
• Accuracy: It predicts what actually happens.”

The book uses examples from real business cases to illustrate what should go into a case and how best to structure the business case document.  Schmidt favours an approach that includes an executive summary, sets out various scenarios, documents the business objectives and describes the proposed actions.  This is set out in Chapter 2, and the remainder of the book is given over to putting some content into each of those sections, with specific emphasis on financial metrics.

The approach to benefits is particularly useful, as people often struggle to quantify the benefits that projects deliver.  It also cuts through the bad practices you may have come across in the past:  “Truly intangible benefits and costs do not belong in a business case,” Schmidt writes.

In fact, even if you aren’t preparing a business case, some of the information about cost modelling in Chapter 3 would be useful for planning a project budget.  Ideally, you’d see the business case (if you weren’t involved in developing it) but for projects that are approved without one, the cost model section in the book would help you construct a valid and pragmatic budget.

There is a lot of information about Monte Carlo simulation and risk analysis in Chapter 5.  This section is technical, as Monte Carlo simulation requires simulation software designed for the purpose.  However, there is also a short section on simple sensitivity analysis, which is basically changing the underlying values and assumptions in your cost spreadsheet and watching what happens to the results.

Overall, this is a useful reference book to have for those times when someone says, “Can you help me write the business case for my project?” 

You can read the original white paper online. If, after that taster, you want to buy the whole book, it’s available as an ebook in .pdf format or you can get a printed version from Amazon.

It’s costly to hire someone only to find that they are not a good fit for the project team.  I spoke to Garrett Miller, an expert in hiring and author of Hire on a WHIM (more on what WHIM is below).  Here’s what he had to say about finding the right person for the job.

Why does it cost so much to hire the wrong person?

There are two scenarios to look at when trying to calculate the cost of hiring the wrong person.

The first has to do with the direct costs of when hiring the wrong person results in turnover.  The estimated costs of turnover vary from 50% to 150% of the employee’s salary.  Experts say to increase those numbers when considering managerial positions.  Needless to say whether you are calculating the costs on the lower or higher end, both are unacceptable. 

That’s potentially a lot of money to a cash-strapped PMO.  What are these costs made up of?

I’ll list a few of the biggest expenses and keep in mind all of the costs to replace this employee were already expensed to bring the outgoing employee on board in the first place. 

Cost associated with hiring the wrong person include: Advertising for the position, HR costs to receive and sort through possibly hundreds of applicants, time to phone screen, coordinate and conduct interviews and travel expenses that are associated with the interviews.  Once initial interviews are conducted there may be second or third interviews, reference checks, back ground checks, developing a package, the offer, the medical check and then the on-boarding process begins.  For some companies the on-boarding process is a few days for others it’s weeks or months of training.  One must think about the time it will take from beginning of the process up until the employee becomes productive.  Have you considered the costs associated with efforts to cover the open position by other associates? The longer the position stays open the greater the burden on those covering and the pressure to fill the open spot increases.  Many times it’s the increase pressure to fill that leads to poor choices and the cycle is set to repeat.  

What’s the second way of looking at the cost of hiring someone?

The second scenario when looking at costs associated with hiring the wrong person may be even more costly.  It occurs when the wrong person is hired and they don’t leave but they stay.  The cost of having an employee that is a poor fit or that is missing an essential quality can be devastating to productivity.  As valuable management and HR resources are mobilized to address and or try to “fix” the hire the morale and productivity of others may be negatively affected while the issues are addressed. 

When wrong employees are brought into the company there is also a cost to the hiring manager’s reputation.  The life blood of the company depends on bringing excellent talent on board and when this doesn’t occur the hiring manager is falling short of his or her greatest responsibility.

OK.  We want to avoid that.  How can managers avoid this when recruiting new project managers, by getting the right person first time?

We can never eliminate hiring errors but we can put ourselves in the best position to get it right.  Here are just a few thoughts:

1. Make sure you are giving enough time for the process to occur.  Many poor hiring decisions can be traced back to hurried timelines or like in the scenario above mounting pressure from others.
2. Look for candidates that possess WHIM (Work Ethic, Humility, Integrity and Maturity).  Candidates must possess all four qualities, don’t look past one in hope it will develop because you have no assurance that it will.
3. Don’t fall in love.  Recruiters are sometimes wowed or impressed by one or two of the WHIM attributes.  These feelings can cause us to overlook gaps that may exist as we look starry eyed at this ‘great candidate’.  I write about my own painful experience in the book, it is very easy to fall into.  Be sober minded!
4. Be careful not to hire duplicates of ourselves or of others.  Yes, we all possess successful qualities, that’s why we are in the positions we are in.  We have all hired great candidates and seek to repeat that process but we must remember that we can’t hire a team full of clones.  If we take the analogy of putting together a baseball team we can’t go out and hire a team full of Derek Jeters or a team full of shortstops.  Each team benefits from diversity of talent, back grounds and skills.  We avoid this when we know what skills, talents, strengths and personalities will best balance our teams before the process begins.

Hmm, I don’t know anything about baseball, but I get the idea.  If you want to uncover the real talents of a candidate, how can you go about that?

Often our interviews are conducted in sterile environments where the atmosphere is very stiff, safe and controlled.   I think it is appropriate to conduct initial interviews in these settings because you want to set the candidate up for success.  I find that conducting second interviews in a different, less predictable environment can help shed light on a candidate.  For example conducting the second interview in the company café adds a whole host of factors.  As you are standing in line you may bump into colleagues which may trigger spontaneous conversations, how did the candidate react and conduct themselves?  Was the candidate polite to those behind the counter, were they patient, nervous, did they pick up after themselves?  All of these help me see the whole person.  If I’m going to interview them anyway, why not mix things up, you may be surprised by what you see, hear and observe.

That’s interesting.  So, finally, what are your top tips for hiring new project managers or project personnel?

For some the tendency is to look for someone who is a driver and can just get things done!  Though this is a great quality to have on the team, I also want someone who also possesses the quality of Humility. 

I define Humility as the ‘ability and willingness to learn’.   I need project managers that are always in the learning mode.   They are open to new ideas and actually solicit ideas from others.  They may have had terrific success doing things their way but they are willing to really listen.  Pride is at the root of a lot of projects that have gone wrong.  In the project review process you will often hear the question, “Why didn’t you ask for help or let me know that you were stuck?”  Humility lends itself to cooperation, collaboration and good coaching opportunities.

More about my interviewee:  Garrett Miller is a workplace productivity coach and trainer, keynote speaker, and author of Hire on a WHIM: The Four Qualities that Make for Great Employees (2010, www.HireonaWHIM.com). Known for his extensive experience in hiring, training, attracting, and retaining top talent, he is president and CEO of CoTria, a company that provides time-saving solutions to help clients manage more efficiently.

A benefit is the improvement you get from a change.  Projects deliver change, and we should always be doing things that deliver some kind of benefit to a group of stakeholders or the organisation.  Benefits realisation management is the process of ensuring benefits are identified, defined, linked to strategic outcomes and delivered.

Benefits realisation management is a key topic in programme management, but it’s equally relevant for large projects.  There are six steps to planning a successful approach to managing benefits.

1.  Create a benefit management strategy

This is the outline for how the project or programme will achieve the desired benefits.  How will you measure benefits?  Who will be responsible for doing so?  How long will you track them for?

2.  Identify benefits and tie them back to project/programme objectives

Benefits, like project tasks, have dependencies.  What are your benefits dependent on?  What benefits do you hope to see as a result of your project or programme?  How do they all fit together to deliver coherent change, and does this take you in the right direction?

3.  Plan when benefits will appear

Just as you plan tasks on a schedule, plan out when you expect the benefits to appear.  Some deliverables will have benefits immediately.  Others may take longer before you start to see any tangible results.  If the benefits are going to appear after the project or programme is finished, who is going to be responsible for recording and tracking them?  Tie this back to the benefit management strategy.

4.  Realise the benefits

OK – now’s the time to deliver the change and make those benefits possible!

5.  Conduct a benefit review

Review the expected benefits against the actual results seen.  How do they match up?  Are your original plans still valid?  Do the stakeholders want to see anything else?

6.  Identify new benefits and tweak existing benefits

Part of the ongoing project and programme management (or the role of the benefits manager, if the project work is over) is to see if the change can result in any new benefits. What else has been identified as positive improvement as a result of the project?  What improvements can be delivered to further enhance the benefits that are being delivered already?

The benefits realisation management approach is set out below.  I’ve adapted this from the benefits realisation process in Managing Successful Programmes.

Ty blogged recently about reading, and it made me realise that I read a lot – a lot more than most people, by the sounds of it.  I commute, so that gives me plenty of reading time.  And I’m a writer – and all writers read; we have to, it’s part of how we improve.

Every so often it is good to read a non-fiction book that isn’t about project management.  It helps me see that there are management theories that aren’t tied to models of project delivery or stakeholder management.  Consumed: Rethinking business in the era of mindful spending, by Andrew Benett and Ann O’Reilly, is one of those. 

It’s about how, as we come out of the global recession, consumers everywhere are changing what and how they buy.  The authors argue that there are clear indications that the way we shop has changed forever. 

We are now more mindful consumers – we care about where our products come from.  We also are happy enough to ‘rightsize’ – to get rid of all our extra stuff through methods like Freecycle, and we feel satisfaction from reducing purchases and tightening our belts. 

The book cites research that says that 75% of adults believe Americans are becoming more rude and less civilised.  We are nastier because we consumer: hyperconsumerism is a root cause of selfishness.

Fortunately, the tide of hyperconsumerism has turned, and we are moving towards a new paradigm of shopping, one that doesn’t require packing more and more features into products, one of simplicity and fit for purposeness rather than ‘fully loaded’.  One that embraces ‘green’.

How does this tie in to project management?  Research in the Netherlands, cited in the book, says that half of all ‘malfunctioning’ products returned to the shop actually work fine.  It’s simply that the consumers haven’t figured out how to make them work.  Consumers don’t want all the extras on products they buy – that you help launch.  They only want the functions they really need.

Project managers can tap into this new wave of rightsized consumerism by making sure that software products, or anything else we are working on, have the features that are fit for purpose.  Don’t let developers increase the scope and functionality without involving customer representatives. Question the research from Marketing that says users want thirty different options.  Challenge the green credentials of your project, and find ways to make your work more appealing to those who will be making the decision to buy it once your job is done.

How are you managing the shift to New Consumerism?

This film shows me talking to Michael Savva, short film producer, about how he managed his project to get his film, Still Waters Run Deep, to the Marbella Film Festival. For those of you who have problems with Flash, the transcript follows, or watch the film at Blip.TV.

Elizabeth Harrin: Hello, I’m Elizabeth Harrin from Gantthead’s The Money Files blog and I’m here today with Michael Savva, a finalist in a short film festival.

Michael Savva: Hi!

Elizabeth: And your film recently premiered at Marbella Film Festival.

Michael: Yeah, that’s correct. It premiered back in October and it was a great festival to be able to…it’s an international festival so it’s really great to be able to premiere a short film at such a big festival; and since we’ve been at three more in the States and hopefully next year, loads more to come, fingers crossed.

Elizabeth: Okay, well that sounds like quite a massive project to take on to do a film.

Michael: Yeah.

Elizabeth: So what I’m really interested in finding out a bit more about is how did you for the life of the project manage the finances around it? So did you start off with a budget?

Michael: I did, I definitely started off with the budget. I started with a budget of something like £1200.

Elizabeth: So you started off with the budget, does that mean that it didn’t quite end up that way?

Michael: It increased up to about £1500 which isn’t that bad but that’s only taking into account the production of the film and I didn’t really plan ahead as far as what the film would become and how big I’d want it to be or where I want to take it. That’s probably where the planning lacked.

So I definitely had that kind of in mind at the beginning and had the idea that’s how it’s going to end. And it’s quite on budget, the majority of the money went on equipment and a lot of staff were able to come along on favours and help out, the crew were able to help out, and the actors were people that were doing it in exchange for showreel material.

Elizabeth: Right.

Michael: So I paid for expenses only but wouldn’t pay for their time. But then in exchange they can use the film to add to their showreel. So a lot of it is definitely planned in mind to say that, let’s keep the budget down, yeah, so it was definitely…for the production, it came on value.

Elizabeth: Okay. So did you put aside some money for contingency?

Michael: Well as I said, I put aside about £300 for contingency on the production itself. What I didn’t account for was things like the festivals afterwards.

Elizabeth: Right.

Michael: I didn’t account for how much the festivals would charge.

Elizabeth: In terms of attending?

Michael: In terms of submitting the film and just how many I’d want to submit to generally. When I started submitting to a few, I started to get a general idea about how it works and what to do. And what you get is a sense of…I emailed a lot of the old entrants into the Marbella Film Festival after I found out that I was going to be in, and I said to them, how many festivals do you submit to, what’s Marbella like, just trying to get feedback from a lot of them. And the general consensus was we entered into about 100, 120 festivals and we only got in to about 20 or 40.

Elizabeth: Wow! How much does it cost to enter a festival?

Michael: It can be anything from generally, some of them are free but very rarely you find one or two that are free. But generally, you’re talking about between £20 up to about £60, £70, £80 and it depends on how soon you want to enter, how big the festival is. They decide on the cost. Sometimes, you have to be selective about which festivals you are choosing.

Elizabeth: Yeah, because that could be easily, going to 100 festivals, £60 a time, £600. That’s half your production cost value.

Michael: Yeah. Definitely, in this case, I’ve spent so much on festivals. The film got its own place out on the internet and got its place in the world and people are quite eager to know about that stuff. I’m trying to facilitate that as much as possible. But in the case of the whole project, I didn’t take into account the festival cost. But that’s something I definitely will take into account next time.

Elizabeth: The next time, yes. Were there any tips that you could pass on about how you track things as you go along? Did you suddenly get to a point and go: “Oh no, I’ve overspent”, or were you monitoring it as you go?

Michael: I was definitely monitoring it as I was going. You have to be very cautious. As I said, equipment is probably the biggest part of the cost.  About £700-800 of the £1200 I planned was for equipment. The rest was on expenses, I managed to get a space, a garage that we used for the film and managed to get that for free. We used my house for the opening and ending shots. You try and do as much as you can on what’s around you and then who’s around you and who’s willing to help and so many  people are willing to help which was really, really encouraging. But you do definitely have to track it. I really did not want to spend over £1500 for the actual film and I didn’t which to an extent, I’m proud of. Again, taking into account the festivals, you know.

Elizabeth: At the beginning when you set out, you had a target in mind and you wanted to go…

Michael: Oh, definitely for the production, you have to…

Elizabeth: To hit to that.

Michael: You definitely have to because otherwise, it can very easily…because what you have, you have people around you saying: “You need this. Oh no, no, no, you need this type of light as well. And you gonna need this as well.” And you have to go: Well, hold it. This light is £400. I can’t be paying £400 for a light. It’s crazy.

Or another thing, there’s music as well. I needed two bits of music in the film. And originally, I wanted some pretty big tracks that were registered, I can’t remember who it was, I think it was a Paul Simon song.

Elizabeth: Right.

Michael: And in the end, they wanted like £900 for four seconds of the song.

Elizabeth: Wow!

Michael: And it kind of hit me that I can’t go ahead and spend £900 on four seconds of a song but then not pay my actors. It just seems wrong and it kind of defeated what I wanted to do originally. Originally, it’s all about getting people together who are inexperienced and trying to get together whether you’re a soundman, a DOP, or a director, you’re all people out there.

So what I did is went to look for unsigned artists and listened to loads of music online and went to loads of bars and listened to loads of music and find some artists that are out there. And in a way, it’s worked out better. One of the bands, Camp David, have gone onto loads of stuff out there and they’re promoting us, we’re promoting them and it’s worked out a lot better.

Elizabeth: The music on film is really good and it’s very appropriate to what’s going on. What’s DOP?

Michael: Director of Photography.

Elizabeth: Alright, okay.

Michael: Yeah, the music was really important and it’s something that worked out better than I planned if I’d gone ahead and paid £900 for four seconds of a song.

Elizabeth: It’s astronomical.

Michael: It’s ridiculous. Yes, it really, really turned out better but something I didn’t account for as far as that much money. I couldn’t just spend that much money for four seconds.

Elizabeth: Yeah. What was your best bargain?

Michael: Best bargain? Well, the floor in the garage is a fake floor so I spent a couple of nights in a van going out and getting pallets, putting it together and then getting some bolts down and making a fake floor. That was really a good bargain in that it was functional. It did what it needed to do for the sense of the film and it’s pretty much free. That was probably definitely.  The actors as well. They were amazing because they were able to just turn up know the script  such hectic environment be able to just deliver. And at 4 in the morning, they’ve been tired. They’d been working for 12 hours. They were definitely a bargain, definitely.

Elizabeth: I’m sure they’ll thank you for saying so.

Michael: Oh, they know it already!

Elizabeth: Great, alright! Well, thank you very much. Where can people find out more about the film?

Michael: Well, the film, website is www.stillwatersfilm.com and you can go ahead and there’s trailers and clips and information about all the actors we used, all the music we used and the people that worked in the film, the DOP, director of photography or whoever else, anyone so that’s all on there and the production company is called New ECW and you can go to that site and you find out about what we’ve done and what else we’re doing hopefully next year.

Elizabeth: That’s great.

Michael: Thank you very much.

Elizabeth: Thanks!