The Money Files

Welcome to the September/October 2013 edition of carnival of project management. I'm glad that this edition is being hosted here this month - it makes a nice change!

So, without further ado, here are the top articles and some interesting reads for this time's Carnival.

Rich Maltzman, PMP presents Your PM Career – Inside Out posted at Earth PM, saying, "We discuss how sustainability can strengthen your PM career from the inside-out and from the outside-in."

Brian Daniel Young presents an introduction to Six Sigma: Why Six Sigma is Important in Business posted at Business and Sports Articles Blog - Cerilene.com. Although you may know that I'm not a massive fan of sports analogies in business.

Ben Aston presents How to run a great project kick-off meeting posted at The Digital Project Manager, saying, "All projects start somewhere. But how you start them can often dictate how the rest of the project or client relationship will run. Run a kick-off meeting well and the rest is much more likely to succeed; Run it badly, and you can find a project or relationship going backwards before you’ve even started. So here’s a few pointers to remember along the way." This article also includes a sample agenda for a kick-off meeting.

There's an article about leadership, Project Manager: leader or manager?, posted at The Project Manager Pad. "While the manager's vocabulary usually includes words such as administering, authority, duties or objectives, the leader talks to people's minds and leverage on their aspirations, needs and abilities more than on company's procedures. The leader acts as an authoritative person, combining conceptual skills like vision and innovation with human skills like influencing and trust."

That concludes this edition. Submit your blog article to the next edition of carnival of project management using our carnival submission form. 

Social communication tools are about using web-enabled technology to get things done more effectively. You may already have web-based project management tools that enable you to collaborate and communicate with your project stakeholders. This is the way that much of project management technology is going, but it isn’t without risk.

Managing the security risk

The security of project information is probably the largest concern for many executives, especially if you choose to adopt cloud-based technologies that store project data outside the organization and enable it to be accessed from anywhere. Whatever solution you adopt, ensure that it has adequate security and authentication protocols for your needs. You will also want to carry out some awareness training so that users know what is and is not appropriate to share on the forum.

This is particularly relevant if you are sharing information with third parties. You may choose a tool that allows you to successfully ring-fence content that your partners can see, reducing the implications for privacy. Social communication tools with few or no privacy settings can be perfectly adequate, but ensure that you know who is using the tool so that sensitive project data is kept secure.

The risk of social communications tools is that they move everything to an online space, whether your company hosts a product or you use a cloud-based provider to store your project data. Ensure that whatever solution you adopt has adequate back up and recovery options in case the worst happens. This is the reason why it is essential to involve your corporate IT department.

Corporate IT teams can also help you establish whether your chosen social communications tool has an audit trail and how you can best access this within the legal boundaries of monitoring an employee’s work. Audit trails are useful for finding out who was the last person to log in, use a document, comment in a discussion, amend the wiki and so on. In a straightforward project environment you shouldn’t need to use the audit trail information but in certain circumstances, such as dealing with a disgruntled employee, it may become necessary to track who has used the tool.

Managing the information overload risk

Social communications do not replace ‘offline’ communications. The connected project manager will still have to prepare written board reports, use emails, produce presentations and everything else he or she did before. Today, social communications rarely replace the need for project managers to communicate through other mechanisms. As a result, it is possible to feel overloaded by the volume of discussion happening in social communication tools. This additional channel requires constant attention, and it can feel like you are losing control.

There are a number of solutions to dealing with this including using aggregation tools (where they exist) to consolidate feeds from multiple channels into one location for you to review at your leisure. However, the easiest way to deal with overload is to ignore it. Switch off the feeds and stop following the discussions. It may feel as if you are losing your grip on the detail of the project but unless you were a particularly command-and-control style project manager you never had this grip anyway. Social communication tools make visible discussions that would have previously happened over email between team members or on the phone. You would not monitor your team members’ phone conversations, so don’t expect to need to monitor everything on the tool. You can train your team to flag important items to you, or implement a categorization system so that you only have to read items tagged with particular words.

Managing personal risk

Managing personal risk is less of an issue at work, and more of a potential problem if you choose to use social communication tools outside the workplace, for example, for career progression and networking. Many social project managers choose to display their personal profiles on professional networking sites, or to extend the personal social networks to work colleagues. This can be a straightforward and positive way of keeping in touch with colleagues, and is now so commonplace that project managers without a presence online can be at a disadvantage when it comes to finding out about job or training opportunities.

However, social project managers need to remember that the internet has a long memory. If you choose to post personal information about yourself online, your employer could see it. That includes holiday photos, comments about your workplace and colleagues and the jokes you choose to share with your network. For the main, professional project managers should have nothing to fear from sharing a bit of their personality with their contacts online. But you need to know where to draw the line, and that line is usually at the point where you wouldn’t mind if your manager saw the information. If you would not share it with your boss, don’t share it online.

This issue is also a concern on corporate social networks where project team members can provide their own profile information. In your profile and in your communications with your team members, make sure that you act professionally and respectfully at all times, as you would with face-to-face communication.

Follow any social media or communications policies in use in your company and where they don’t exist, use your common sense!

How good are you at estimating? It’s a tricky skill, and however good you think you are at it, there’s always a chance that you’ll make a fundamental mistake which will have a massive impact on your project budget or timescale.

In his book, The Project Management Book, Richard Newton sets out a number of tips for better project estimating. Here are my favourites.

Use your experts

“Estimation,” Newton writes, is best done by the most expert people in the team, with the greatest familiarity with the task in hand.” That means not asking your most junior project team members to estimate ‘as a learning experience’ unless you have expert estimates being prepared as well. Even the most expert of expert may not have had experience in this particular project task, but there is normally something that you can draw on to come up with a sensible estimate. This could be a similar (but different) project, an industry standard or something else.

Decompose your tasks

Breaking down your tasks into smaller chunks can make them easier to estimate, but only in certain circumstances. “Estimating 10 small unknown tasks is not inherently any easier than estimating one big unknown task!” Newton says. If you really have no experience or structured approach to estimating this brand new work, think about how you can get that from people outside the project team.

If you do have the skills in the team to estimate, you are likely to get a better result from breaking the tasks down into smaller activities that can then be estimated. Add the estimates together to get the overall time or budget required.

Estimate as a group

Take inputs from various different team members – everyone has a different background to draw on and could have something valuable to contribute to the process.

Don’t impose estimates on others

“Estimates are not only useful as a planning guide, but also as a basis for commitment,” Newton says. People are more likely to sign up to estimates if they have had a hand in preparing them. Many subject matter experts will reject estimates that they have not prepared themselves, especially if it looks like the estimate has been put together by someone who knows less about the subject than they do (i.e. you).

Factor in limited resources early

You can’t always deliver a project exactly by the book. So there isn’t much point in preparing resource estimates based on what you would like to have in a perfect world. Even if that is how estimating works in your project management manual, in real life you are constrained by the availability of resources and the other tasks that they are working on, so build this into your estimates now.

“Start by estimating the times the available resources will take to do the project, rather than planning around perfect resourcing levels,” Newton writes. “The problem of lack of or limited resources should be factored into plans at the outset and not treated as a surprise!”

Add contingency

This might seem an obvious estimating tip, but adding contingency is not something that should be overlooked. Newton recommends having one central pot of contingency so that it can be managed and allocated as required. It should be kept separate and not as an overhead to every task, otherwise the team will come to feel it is their right to use it. That isn’t the case! Contingency is for emergencies, so having it kept aside helps reinforce this.

Don’t add too much contingency though, or you will find yourself in a battle with your sponsor or line manager. He or she is concerned with stripping as much out of the budget and timescales as possible. You, as a project manager, could be concerned with underestimation and building in buffers. You’ll have to meet half-way, with a contingency pot that is realistic and yet appropriate for the risk and ambiguity present in your project.

As Newton says, “If you know nothing about something, then you are not estimating, you are guessing!” So make sure that you are your team approach estimating from a position of knowledge and avoid the guesswork.

Every so often I’m asked questions about project budget. Here are a selection of your questions and my responses.

How can I manage my project cost when the actual budget is controlled by the functional prime in my organisation?

Marco, thanks for your question. This is a tough one. I don’t think you can be expected to have full control of your project costs when the budget is controlled by a functional manager. In a functional organisation (or even a weak matrix organisation) when you are not in control of the budget or resources, it is very difficult to manage in the way that you would in a projectised organisation where you have complete control over the resources and finances. I have worked in this way and it ended up getting quite messy with the functional manager approving additional work, additional purchases and the use of additional staff (to do what I considered business as usual tasks) and all of this resulted in the budget going over the forecast. However, he didn’t seem to mind, so in a way that’s OK!

What you can do is prepare a budget forecast and meet with your functional manager to go through it. Ask what their understanding of the scope is and whether there are additional tasks that he or she thinks should be included. Then your role is really about tracking the expenditure and reporting the progress against the forecasted budget. All you can do is flag up to your operational manager that it looks like you’ll be going over the predicted project budget. And ask for their help in correcting that, or to approve further spending.

Good luck!

Why is it important to categorise costs between Project Management Costs and Project Deliverable costs?

Diane, this is a great question. And it’s worth starting out by explaining the difference between project management costs and project deliverable costs. Project management costs are the costs of running the project. That includes things like setting up a special project office if you need one, the cost of temporary project staff, overheads, software (if you need to buy a new project management tracking system or a wiki tool etc) and so on. Project deliverable costs are the costs of the stuff needed to produce the project deliverables – what you would traditionally think of as project costs. These are things like equipment (new servers, machinery, furniture for the new store you are opening etc) and software or maintenance costs, such as the cost of purchasing new software and licences for an IT systems project.

You can categorise costs however makes sense to you, your project team and your accountants, but I find the distinction between management costs and deliverable costs very useful. It helps make it clear what the project management overhead is – the cost of doing the project at all. The deliverable costs would be incurred whoever ran the project. The management costs will be different if the project is being run in house or by an external project consultancy.

When budgeting, accounting departments want one number and not a range for their budget accounting systems? How do you choose what number in the range for the total project cost?

By a range, you mean a total project cost figure that is between $x and $y. In the early days of putting your budget together I do recommend that you use a range instead of presenting a single figure. This is because it highlights the fact that there are certain unknowns at this point and it encourages stakeholders and project sponsors to think widely about the likelihood of achieving an individual target figure.

To answer your question, I think you should work with your finance department to enable them to record a range in their systems! However, I know this isn’t going to be practical in many cases, so it is your choice which number from your range you choose. Being quite conservative, I would suggest that you choose the largest figure. That gives you a bit to play with even if you don’t ever intend to use it. And it can always be released or amended later. So, if your project budget forecast is between $700k and $900k, I would tell the finance team to use the $900k figure in their accounting systems.

Remember to keep an eye on how your actuals are shaping up so that you can reforecast and amend this appropriately later.

Last year I gave a webinar on managing project budgets, which also included the answers to many questions. You can see the whole presentation online here, via a recording of the webinar. I’ll have some more Q&A for you soon! Got any questions? Leave me a comment and I’ll answer them in a future post.