You hear it all the time: “We want our project managers to add value.” “How are you adding value to the organisation?” “I want to spend more time on valued-added activities.”
But what does adding value actually mean?
I’m not a great fan of buzzwords that I can’t explain and turn into practical actions, so I’ve given this topic quite a lot of thought over the years. Here are 5 things I think you can do to add value (in a meaningful way) as a project manager.
1. Team building
Projects are done by people. People make up teams. Groups of people don’t have the same impact as a well-functioning team. Therefore, spending time on team building is worthwhile and will create value for the organisation because you’ll be better at delivering whatever it is you are delivering.
Focus on creating a positive work environment. Think about what people need to get their tasks done. Look for roadblocks you can remove, processes you can streamline. Talk about the blockers and why they are a problem.
And get some fun in there too.
Being committed to the team and the job, and the project, is a sure way to add value because it increases the chance the project will actually get done. How many projects do you know of that started but didn’t have the momentum to get across the line? That’s what tenacity will help you avoid.
Assuming you are working on the right projects, the ability to follow through and get the work done is important for making sure your time pays off for the company.
This is such a large topic, which includes resolving conflict, smoothing over awkwardness, being diplomatic while speaking truth to power, respectful challenge and knowing who to connect and when. There’s a whole bunch of soft skills (or power skills, as it is trendy to call them now) that fall into this bucket.
They are important because this is what helps you get work done even when the environment is tricky. The more you listen, the more you understand and the easier it is to get your projects done. You’ll understand more of the business context that lets you make the right decisions that – you guessed it – lead to delivering a higher-value result.
4. Control the process
Governance might not seem like a particularly value-added thing to do, but when you understand and use the processes of project management, you can structure, standardise, save time, automate, compare and improve so much more easily.
If you have a standard approach, however informal, everyone knows what to do and what to expect and that takes some of the uncertainty out of what is normally a pretty uncertain time for people – projects deliver change and that comes with an overhead of having to live with not knowing exactly what the future will look like. That can be an added source of anxiety and stress for the team and wider stakeholder community.
5. Change management
Projects start to feel out of control when change is not managed appropriately, and that’s when stakeholders start to get nervous. You can help your projects be more successful and ‘land’ better with the receiving organisation, if you manage change properly.
That goes for both the process-led effort of receiving and handling change requests as part of your project management work, and also integrating what you are delivering into the business in a way that makes it possible for the benefits to be received as soon as possible, with the least disruption. Benefits = value.
How do you interpret ‘adding value’ as a project manager? I think it could go much further than what I’ve written here. I’m sure there are many other ways of looking at our role and how we can serve our stakeholder communities in the most value-adding way. Let me know by leaving a comment below!
Sunk costs… what a headache when it comes to decision making. In this video, I talk about what they are and why they are a problem. If you don’t feel they are a problem for you as a project manager, then all credit to you!
In summary, sunk costs are those that have already been paid out. They are budgeted expenditure that has already been committed – the company can’t get those funds back. I agree they absolutely that this expense shouldn’t cloud your judgement, but unfortunately not everyone in the project sphere feels the same way and often decisions are made with sunk costs playing a large part in what next steps are taken.
In my view, project sponsors who feel that saving face is more important than business value are most at risk from making choices that perhaps wouldn’t stand up to too much audit scrutiny when the project is reviewed for benefits in a couple of years’ time post-delivery. Having said that, everyone is at risk of feeling invested when they have poured effort into working on something.
We have to work really hard to make sure that sunk costs, and the emotion attached to a project, don’t play a part in tough decisions about the project’s future.
Watch the video and then share your thoughts in the comments below: am I right, or is there more to it? Can’t wait to hear your views!
Do you have a formal Change Control Board (CCB)? If not, this is the perfect time of year to be thinking about levelling up your processes and putting new ways of working in place to formalise the way change management is done across projects, programmes and the portfolio.
A Change Control Board is simply a group of experts that represent different organisational departments and who oversee both the process of change management and the different changes being put forward.
At a project level, your CCB is a group of people who know the project well and who can assess project-related changes, but at some point if your project is making changes to the live environment, like most IT and business change projects do, the change will need to be submitted to the wider, department or organisational CCB.
The role of the CCB is to:
How it works
In our CCB, the functional lead or the project manager had to present the change. We had to talk about what it was, why it was useful and what it solved, and then make the case for whether it was a priority fix or not. If the change was considered a priority, it could go in the same day (mostly). If it wasn’t, it could be packaged up with a bunch of other small changes and go in the next release.
That made it easier to communicate changes to the end users.
Discussing the change
First, the change should be analyzed and discussed to see whether it has impacts beyond what the project team can comment on. The Change Control Board is convened to do that. I think the CCB is a really useful group and we relied on it in my last job. Our CCB looked at operational and project changes so the team could see the impact of ‘normal’ changes as well as the project-related ones.
I think it’s important that the CCB is made up of a cross-organisation group. It’s too common for changes (especially IT changes) to go in and for there not be a full understanding of the business impact somewhere else down the line. Complex ERP systems like SAP make that more likely, so a group of functional consultants getting together to discuss changes before they happen is a good thing.
I’ve had some changes rejected by the CCB because they didn’t have enough information to make an informed decision, or because something else was going on and they needed to wait on that, or because there was a change freeze. There might be many reasons why your change doesn’t go through.
The CCB can also schedule changes. There are normally scheduled windows to put changes in, especially in the live IT environment. That helps the support teams and the users know what is going to be different and what to look out for when they next log in.
Scheduling as a team also ensures that conflicting changes don’t get put in on top of each other. For example, if my project is updating the list of available categories in one part of the system, and another team is also updating that part of the system but taking away the category feature (that’s a bit extreme, but you see what I mean) then those conflicting changes can be discussed and overseen in an appropriate way.
It might involve putting them live in a particular order, or prioritising the changes so that one piece goes in this time and the additional change is put in next time.
I remember being told a story of a change in a data centre where engineers were working on cabling and flooring on both sides of a server stack. Without the support of flooring on both sides, the server stack toppled over! That’s the importance of making sure that changes are managed in a scheduled and sensible way.
We also had an emergency change procedure for anything that could not wait until the next release. On the SAP projects, for example, mostly things could be scheduled in a batch and changes pushed through on a fortnightly basis. But sometimes it was important to fix an issue straightaway without waiting until the next release. For example:
All of these are emergency fixes to live systems that wouldn’t be appropriate to delay, and they are all issue-related, not nice-to-have features.
How does your CCB work?
Project financial analysis is what happens before a project is approved, and is a way of making sure that the company is spending its investments wisely by making smart choices about what projects to take forward. Thorough analysis is important to ensure that you don’t end up doing projects that lose money.
According to The Harvard Business Review Project Management Handbook: How to Launch, Lead, and Sponsor Successful Projects by past PMI Chair Antonio Nieto-Rodriguez, there are 5 common financial metrics: opportunity costs, payback period, IRR, NPV and ROI. Let’s take a look at those.
Opportunity costs are a way of looking at what you aren’t going to do because the business’ resources will be tied up on this project. If the other projects are worth more to the business (however that is decided), then this project should be put on hold and instead the other projects should be taken forward.
You’ll need a relatively mature portfolio management approach to do this because you’ll have to identify the other projects that will be put on hold, and have budget/resource assessments for them to calculate what it would cost to do those – and have information about their benefits. If you’re in the kind of business that only does full business cases when the idea is pretty much ready to go, then this could be hard.
Even so, you should be able to include a paragraph in the financial evaluation that talks about the fact other projects will not be going ahead if the company decides to invest in this work.
This measure relates to how long it takes before the project starts to generate a return. On a programme, that could be before the end (and I’d hope it would be) because individual projects should be generating benefits as they complete.
Nieto-Rodriguez talks about the duration of the payback period being set by the organisation. Then if the project earns back the investment before that time is up, it’s a worthwhile investment. If it’s going to take longer than that, it’s time to think again. Typically, shorter payback periods are better, as it means the project starts to earn back more than it cost to do in a shorter time.
Internal Rate of Return (IRR)
I used to find IRR a difficult concept to understand, because rate of return is quite clear, but what’s the ‘internal’ all about? IRR refers to the amount the project ‘earns’ for the business. IRR is expressed as a percentage, and relates to the efficiency of the investment.
Let’s say you put your project budget in the bank and didn’t do the project. Instead, you just claimed the interest that the bank paid on the money. Your investment is safe, and you make some money back. But bank interest rates are pretty rubbish for the most part.
What if you did the project instead? The IRR calculation tells you what the ‘interest’ rate would be – it’s a different way of looking at the way project’s generate return. If the IRR is better than what you’d get in a bank, then the project is worth doing. If the IRR is less than what the bank could offer, you may as well save your time and effort and put the cash in the bank – assuming that financial returns are what you want to get.
Net Present Value (NPV)
NPV is really useful, because it helps you work out project financials as they relate to what money is worth today. A positive NPV is what you are looking for: that translates as the project forecasts being worth an amount that generates future cash at an acceptable rate.
NPV targets, minimum rates and discount rates may be set as industry standards or by your finance team, so check how if there are any specific variables or values you are expected to consider in the calculations (or better still, get a finance person to give you a template where you just plug the project forecasts in and get the NPV out). NPV is expressed as a financial value.
Return on Investment (ROI)
This measure relates to the project’s financial return given the investment made to deliver the project. In the business case or financial documents, it is expressed as a percentage of the total anticipated project cost, often including the Year 1 to 5 opex or running costs too, but the exact calculation will depend on the criteria set by your finance team.
ROI is a way to clarify what the business gets back from its investment. Typically, the higher the ROI, the better, as it means that the company is going to receive more income from the investment and it will pay off in a better way.
Or perhaps this article should be called: 5 pitfalls that can happen when EVM is not implemented the way it should be!
Here are 5 things that can go wrong when an organisation chooses to implement Earned Value Management as a way of working for project performance tracking.
1. There is low organisational support
Possibly: there is no organisational support outside of the PMO. EVM is very much an enterprise-type solution so everyone needs to be on board. The whole organisation needs to know what it means for them as individuals and as a team – and you should try to bust the myth that it’s all complicated maths.
In reality, most of the tools now do all the heavy lifting for you, so there’s no need to be hands on with the maths. However, the project delivery teams are going to need to understand the inputs and outputs to the formulas so they can interpret what the numbers are saying. That’s the secret: it’s making sure the wider team understands that the move to EVM is all about creating a set of essential measures to track performance and improve project control.
2. Thinking of EVM data as the answer
EVM data is simply a representation of current project performance. It’s not a decision in itself. It’s not a set-in-stone forecast that tells you what is definitely going to happen.
The team can still adapt and change, mixing up what they do to shape future performance, preferably in a positive way. The data should be seen as decision support information, helping the team make the right choices about what to do next in order to get the best results for the project.
3. There are poor or no decision-making processes
Pitfall #2 brings us on to this one: EVM implementations struggle when the organisation has poor (or no) decision-making processes. There should be some way of managing decisions as part of project control. Decisions and management responses to situations should be structured and repeatable, not knee-jerk. Proactive action taking is better than reactive ‘let’s just do something and cross our fingers’ type decisions.
EVM data is good, and helpful, and informative but if the project leadership team don’t have the power or ability to do anything with it, then the data is just a set of pretty reports no one ever looks at. Decision makers should be looking for patterns, documenting decisions made and their outcomes so that future decisions can be shaped by today’s lessons learned and building credibility by using the information to improve project performance in meaningful, predictable ways.
4. Limiting EVM to a small group
When EVM is implemented, we talk about it being a whole enterprise thing, and that everyone needs to understand what it is and the value it brings to the organisation (as discussed in Pitfall #1 above). But making it ‘a whole enterprise thing’ actually goes far wider than a communication campaign.
When EVM is implemented, it’s important that the whole team is able to see, input, act on and engage with EVM numbers. They should be responsible for their part of the system. In other words, it’s not a good idea to limit the people with hands on experience to a small sub-group of project practitioners in the organisation. It’s ineffective to ask project managers to provide time sheet information, for example, to the gatekeepers who then load it into the system and provide monthly reports in PDF format.
That leads to a couple of problems. Practitioners feels like they aren’t truly included in the EVM and will probably disengage from it. For them, it becomes one more set of data points to submit to someone else for reporting; something that happens outside of their sphere of influence (or interest). It also creates a culture of auditing, where individuals feel that their work is dissected by people who lack hands on experience. EVM shouldn’t turn out to be a ‘them’ and ‘us’ experience in practice. For best results, it really does need to be a whole team process with plenty of input from everyone. Basically, it needs to become ‘how we do business round here’.
5. Not creating a common vocabulary
Of all the various aspects of project management that require specialist jargon, is EVM the worst? I think it could be. There are all the acronyms (PV, EV, SPI, etc) and formulas. There are control accounts and control account managers (which must make control accounts very important if they have their own managers), plus the terminology that goes along with the WBS.
The benefit of all this jargon is that when it is understood by everyone, it provides a common and clear way of talking about the same things. You avoid the misunderstanding of schedule vs plan, for example, because there is a common language with terminology that means the same thing to everyone. That’s powerful. It’s also good for decision making because clarity of understanding helps execs make the right call.
Next month I’ll be looking at a few more pitfalls from EVM implementations that are not done in the best possible way, but meanwhile I’m interested in your views. What have you seen go wrong with EVM rollouts in the organisations where you have worked? Let us know in the comments!