The Money Files

In this edition of my occasional Ask the Experts feature, I talk to Eric Winquist, CEO of Jama Software, about how to avoid duplicating work and how reusing requirements can save companies time and money.

Eric, you did a survey recently in which 58% of respondents said their company frequently duplicates work when it isn’t necessary. What are the pitfalls of doing this?

Lack of efficiency is the main drawback to duplicating work—it takes 2-3 times longer to build a new product when yourecreate the wheel. When you consider multiple products in one overall line, you’ll note lots of overlap in functionality. Some new products only require small modifications, yet in many organizations, there’s no way to know that.

Recreating existing requirements over and over again increases risk. Multiple versions increase the chance that things get missed, which diminishes the quality of your product. The end result is a costly fix and potentially late delivery. Organizations that centrally manage requirements respond to change faster and catch errors earlier because they are leveraging requirements that have already been developed and tested.

A lot of knowledge thus goes to waste. By creating an environment of reuse, you can harness all that intellectual property, connect the dots and build enterprise libraries of strategic assets, which continually improve over time.

What do you mean by reusing requirements? Is it the documentation, or the code components that gets reused in order for companies to be more effective?

When we talk about reuse, we are not talking just cut and paste from one document to another. We are talking about everything that describes scope – text or visual requirements, mockups, use cases, epics, story cards, plus all associated context around it. So the test cases, the changes or updates, the documentation, traceability, or relationships, decisions around the requirement – at every stage in product delivery from elicitation to launch, a requirement goes through numerous phases. Requirements available for reuse are battle-tested and proven.

Would this work with projects that are not software projects?

Yes. Enterprise reuse works for any product deliverable, whether a software implementation, a web-based project, or an actual piece of hardware. For example, one of our customers manufactures hospital beds and wheelchairs; different hospitals have specific customization as to the specs, but the bed or chair has the same basic requirements. Reuse is an incredible asset for manufacturers as it simplifies and speeds pulling together new products from core components.

How can companies best archive/store/catalogue their requirements so that they can be reused again when required?

Companies can operationalize requirements – by that we mean they can create central repositories of items, including components, requirements and processes for use across the enterprise. For example, a product manager could use Enterprise Reuse in Jama Contour 3.6 to store core requirements, define the scope and vision for the entire product line.

Different project managers can then replicate the project hierarchy and copy related test cases and requirements for each individual product in the line. They have the advantage of having all the core requirements integrated into their projects and having them auto-sync, so their project is always up-to-date with changes and updates across every project that uses the same core requirements.

They would be able to automatically sync their requirements into their specific products, bringing along all the items’ tags, attachments, links and continuing to use all the relationships to any set of items.

How important is reuse to being able to deliver on time? What are the other benefits of reuse?

New projects that can pull core requirements are already partially completed, in the sense that so much of product success relies on solid requirements. We have one customer who, prior to reuse, spent six months with three people to stabilize a specification. With reuse, it now takes one person one month. We’ve seen companies reduce their time to market by two-thirds and increase efficiency by as much as 85%.

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Wow, that’s impressive. Do you have any other examples?

SpaceX is a great example of requirements reuse. SpaceX designs, manufactures and launches the world’s most advanced rockets and spacecraft. In 2012, SpaceX made history when its Dragon spacecraft became the first commercial vehicle to successfully attach to the International Space Station — a feat previously achieved by only four governments. Like many other large organizations tackling complex projects, SpaceX was challenged to meet aggressive launch schedules and turned to Jama Contour’s Enterprise Reuse capabilities to create common assets once to support parallel development efforts.

Reuse allows SpaceX to maintain all the common requirements—managed by a core engineering team ensuring?that they are current and accurate—in one central place. Engineers working on specific projects can access requirements quickly and easily. Additionally, if any of the common requirements change, the engineers are notified and can determine the appropriate action. This enables them to spend their valuable time on the requirements unique to each project. Using Contour, SpaceX has eliminated cumbersome spreadsheets to track requirements and other important details of projects. This allows the company to focus on design and development and missions to space.

Thanks, Eric!

About the expert: Eric Winquist is CEO of Jama Software. In July 2007, Eric founded Jama Software with the vision of providing customers a more collaborative way to develop new products and eliminate the common frustrations with traditional approaches to requirements management. Eric is an accomplished entrepreneur and project manager with over 15 years’ experience working with a wide range of enterprise organizations, teams and technologies.

About the author: Elizabeth Harrin is Director of The Otobos Group, a project management communications consultancy. Find her on Google+ and Facebook.

It’s not too late to start thinking about financial planning for the year. If you didn’t get a chance to catch your breath in January, make this the month that you sit down and think strategically about the year ahead. Here are 5 themes to consider – all things that your C-suite executives will be thinking about as the calendar year starts and financial years come to an end about now.

1. Staffing

Yes, everyone is concerned with staffing levels. How many people do you need on your project, and could you manage with a few less? This will be the question everyone is asking this year. Despite the economic situation looking a little bit better than it did a while ago, cost saving is still the watchword.

Look out for project sponsors, PMO Directors and other senior managers asking you about what you can achieve with fewer people. Be prepared to have a few reasons why you can’t manage with a smaller project team (if you believe that you can’t – of course, if you do feel that the team is a bit bloated, this could be a great reason to get rid of some of the dead weight!).

Equally, if you need to recruit, start putting together plans for why your project team needs additional people. Pull together a person specification and start thinking about interview questions.

2. Capital

Strategic planning has to include money. Capital costs are those that are part of the initial outlay for the project and are the main part of any investment. Capital is hard to come by in some companies and may have to be borrowed. Borrowing money always comes at a cost, so you may have to factor in debt repayment into your business case (it’s more likely that this will be managed at a corporate level by the treasury team, and you won’t need to bother about this at all).

3. Operating Costs

Operating costs are the costs of running the project. They include staffing, but also things like meeting room hire. This is how much it costs to run your project team or department and to deliver what you have been tasked to do this year. Essentially, all these costs are overheads. As such, senior executives are always looking for ways to reduce them. This could mean cutting the level of staff (see above) but will also include things like cancelling away days.

Cost savings can come in various different forms. The UK government recently issued a document highlighting 50 ways that local councils could make savings including improving procurement. It gives the example of Birmingham City Council, which adopted a collaborative approach to all energy procurement in partnership with local energy providers, and has saved £4.7 million per year.

4. Benefits

High on the list of things to consider for strategic plans is project benefits. Which projects in the company are set to deliver the most benefit? Do we even know? Be resourceful and if you can, offer information to decision makers about the projects that you have on the go at the moment and the benefits that they will deliver. This helps show that you are aware of strategic priorities but also points out that you aware of what you are working on and how it will help the company overall. It also highlights that you are working on benefit-producing work (aren’t you?) and therefore are a key player in the department or company.

5. Forecasting

Finally, strategic plans also need an element of forecasting. You should be able to look backwards and use that data to forecast forward. Forecasting includes all elements of resource planning from how many people you will need in which department when to when big bills will be paid so that the company can make sure its cash reserves are available at the right times.

You can use project management software to forecast your resource utilisation and cost predictions, and then these can be fed into the overall model for the department or PMO. At a company level, you may have to provide some very high level figures to contribute to corporate planning.

Even if you are not asked to forecast, it is a sensible idea to have a go – this is a good time of year to be thinking ahead about what you will need to complete your project, so why not set up your own spreadsheets and turn your hand to forecasting?

Strategic planning in your company may involve lots of other elements, but starting with these 5 things will certainly give you enough to talk about if you meet a C-suite executive or are asked to contribute to the strategic plan for your area.

About the author: Elizabeth Harrin is Director of The Otobos Group, a project management communications consultancy. Find her on Google+ and Facebook.

It’s the time of year when project managers (and everyone else) are looking to make resolutions. You know, the kind of promises you make to yourself in the dark days of winter and then have completely forgotten by Easter.

On the off chance that you’ll be making resolutions this year, here are some you could consider. They all have a money-related theme, so if you want to brush up your budgeting or polish your financial management skills in 2013, these could be great resolutions for you to adopt. So here we go: 5 promises for better money management over the next 12 months.

1. I will look at historical data for forecasts

When you are managing projects that are repetitive in nature and that the team has a lot of experience of, it’s very tempting to simply let them estimate the length of tasks and assume that they know what they are doing. Most of the time, they probably will. But it is worth validating their estimates against historical data from timesheets and previous project schedules. Use your online project management software to pull up reports of how long things took the last time you did them.

This could be at the level of an individual task, like completing a particular piece of coding, or a project phase, like testing. Or both. The purpose of checking is to make sure that your estimates really are sound and that the people who are estimating are not making the same mistakes about task duration on every project.

2. I will do my timesheets in a timely fashion

This is a personal resolution for you, although you could extend it to all your project team members. The risk of not doing your timesheets on time is that you forget exactly what it was that you were doing. As a result, you block out 8 hours per day for a task called ‘project management’ which doesn’t give you any breakdown of how you actually spent the time. Worse, you could be booking time to one project when in reality you got pulled off that project to spend half a day on some other project. These things happen in real life, to you and your team members.

By aiming to complete your timesheets at least weekly you’ll not have long enough to forget what you were working on!

3. I will understand Earned Value Analysis (or teach someone else how to do it)

If you don’t understand EVA, make 2013 the year when you get your books out and study how it works. If you do understand EVA, make a resolution to share your knowledge with someone else this year. Even if you don’t use EVA on your projects, it is a very useful skill to have.

4. I will do my expenses on time

Most project managers will incur expenses in the course of their job, such as travel to meetings. Not doing your expenses on time means that you are out of pocket. Many companies only pay expenses once a month in the monthly pay run, so don’t let your expense bill mount up – that’s effectively a loan to your company.

Get your personal paperwork in order by keeping receipts together, noting down your mileage after every trip and understanding the schedule for submitting expenses so that you don’t miss the deadlines.

If your expenses are being cross-charged to your project it is even more important to get your expenses in on time. If you don’t, your project budget will reflect that you have more ‘in the bank’ than you actually do.

5. I will review my budget quarterly

You do this already, don’t you? If not, make 2013 the year when you review your project budget forecasts regularly. If your project runs over two quarters you’ll probably be asked to do this by your finance team anyway, but even if you are not, it is still good practice to get out your spreadsheets and just check that you are still on track to stick within your budget tolerance limits.

Have you chosen any of these as your resolutions for 2013? If not, what are you having as your resolutions instead?

Elizabeth Harrin is Director of The Otobos Group, a project management communications consultancy. Find her on Google+ and Facebook.

In this video we look at analogous estimating techniques.

Elizabeth Harrin is Director of The Otobos Group, a project management communications consultancy. Find her on Google+ and Facebook.

Enterprise Risk Management (ERM) sounds pretty advanced, like a bigger, better version of ‘ordinary’ project risk management. So what is it and is ERM really more complicated to do than the risk management we are all familiar with? I asked Chris Bell, Chief Marketing Officer at Active Risk.

Chris, tell us a bit more about what ERM actually is.

ERM is a scalable, holistic approach to risk management that consolidates and organizes risk information from across the organization into one location so that it may be used for improved decision making. By embracing ERM and creating a risk management culture, organizations can drive business performance, innovation and growth, while protecting company reputation and shareholder value.

OK, I can see that could be a really valuable function for a PMO – to be able to have all the risk information from across multiple projects in one place. If companies want to do this, how do they get started?

Unfortunately, too many leaders still perceive risk management as a complex progress. In reality, there are six steps that need to be followed to enable organizations to optimize the strategic value of risk – regardless of the industry, vertical, size or scope of the project.

First, employees across the business identify the risks currently facing their project or organization. It is critical to identify all risks, including risks that are low probability but high impact, which may have been ignored in the past. While each employee may know several risks, getting everyone into the same room to identify risks together will quickly yield a more comprehensive, more accurate list.

Yes, that’s the same approach as we use on projects, but spread out to include everything managed by the PMO or company. What next?

In the analyze step, teams evaluate each risk individually. How likely is the risk to occur? Who/what will be affected if it does occur? What are the business implications of the risk (e.g. schedule, budget, and scope)? Most risks have more than just a financial impact, so all business implications should be considered. This analysis should start to bring to light the interconnectivity of risks, and some of the connections may be surprising. For example, several different project teams may be relying on the same supplier or the same piece of equipment to meet different schedule and budget requirements, taken together that might cause a problem. At the end of this process, the team should have a comprehensive list/database of risks that can be organized by probability and impact to the project or organization.

Then the team agrees on the best course of action to manage each risk. This is where strategy is key. Often, the team will need to consider the business impact of the risk occurring versus the business impact and cost of controlling or mitigating the risk. If it makes sense to mitigate the risk, the team will discuss steps for risk reduction, risk transfer, insurance, and other options. At the end of this step, leaders should have a clear picture of all relevant risks, how they interrelate to each other, and how they will be managed moving forward.

The PMO would be a good place to keep this information, although it would have to be kept up to date regularly with assigned owners.

That’s correct. The monitor step is about accountability. A person or team should be assigned to each risk, so that they are responsible for monitoring and executing the mitigation plan.

So that’s where it ends?

No. There’s another step for organizations to streamline and enhance their ERM process and risk culture. Are the right people involved? What new risks can be identified? How can we improve the way we’re managing existing risks? Organizations should reward – not penalize – those who share risk information. The earlier a risk is identified, the easier and cheaper it usually is to stop it happening or reduce its impact.

Well, that’s true. How do project leaders get information about the risks that have been identified?

A best practice is to build reporting into the management cycle of meetings so that the right information is available in the right format at the right time. Having a reporting system readily available also ensures that ad-hoc questions from senior management can be answered at any time, with confidence.

Do you have any examples of companies currently using this ERM process on their projects?

A current example of a company that follows the six step process is Crossrail. Crossrail is Europe’s largest infrastructure project, constructing a new rail line across London with 21km of tunnels underneath the center of the city. The project, which has a budget of £14.5 billion, will increase London’s rail transport capacity by 10% by 2019.

Risk management is now an integrated part of Crossrail’s culture – tied into key progress indicators (KPIs) and therefore directly affecting employee bonuses.  The Company has also insisted that its most critical contractor and supplier partners implement the same risk management process and system, sharing real time risk data with Crossrail’s project managers. With the six steps in place, Crossrail has seen benefits including improved business performance and stronger, more effective partner relationships as they work on this very important project.

Given the amount of building work in London at the moment to support Crossrail, I think it’s great that they are integrating risk management and mitigation into their project plans. Thanks, Chris, that’s really insightful!

About the expert:

Chris Bell is the Chief Marketing Officer at leading ERM software provider Active Risk. Chris brings life and energy to technology and business topics such as Enterprise Risk Management (ERM), Project Portfolio Management (PPM), and Governance Risk & Compliance (GRC). He is also a published author of many articles, white papers and books, including EVM for Dummies, and contributed to Active Risk’s ERM Readiness Guide. 

Elizabeth Harrin is Director of The Otobos Group, a project management communications consultancy. Find her on Google+ and Facebook.