Game Theory in Management

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Modelling Business Decisions and their Consequences

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When Is Culture To Blame?

Never Mind PMO Of The Year – This Is The PMO Of The Century

Is PM As Technically Advanced As It Should Be?

Why PMs Can’t Have Nice Things

Beware The Spaghetti Diagram

When Is Culture To Blame?

When it comes to advancing Project Management capability within an organization, there are two vaguely-defined monsters that keep popping out of dark corners to savagely obliterate such initiatives. They are “politics” and “culture.” I sincerely can’t count the number of times I’ve heard frustrated managers blame one (or both) of these as the reason they failed in their attempts at “doing” PM, as if these causal agents were completely out of their control. Since we can’t counter such monsters without knowing exactly what we’re up against, I’m going to go ahead and take a shot (get it?) at scoping them.

Politics – at least the variety seen in the office – I define as the pursuit of an agenda that benefits the person pursuing it, but is at odds with the advancement of the project team as a whole. Obviously, if the project team seeks to advance PM capability within their organization, and a member of the team sees an opportunity to benefit themselves at the expense of this advancement, the temptation will be to go ahead and engage in a purely political maneuver.

Recall my previous references to the excellent Michael Maccoby, author of the book The Gamesman: The New Corporate Leaders (Simon and Schuster, 1976), where he posits four archetypes of workers:

  • The Craftsman cares deeply about his output, but not so much about for whom he works.
  • The Company Man tends to adopt the persona of the macro organization.
  • The Jungle Fighter gets ahead through calumny and deceit, rather than through actual merit or quality of contribution.
  • The Gamesman sees his paycheck, not as food on the table or a roof over his head, but as a token in some grand game he is playing. As such, he tends to both master the rules of the “game” to a greater degree than the other archetypes, and tends to take risks more willingly.

Now, of these types, whom do you suppose would be more willing to pursue a personal agenda at odds with the Project Team’s direction? If you said “Jungle Fighter,” go to the head of the class; however, if you said “Company Man in an environment where Jungle Fighters have significant sway,” you can leave the classroom, go do whatever it is you want, and I will give you an “A” for the semester.  Should the Jungle Fighters and Company Men influenced by them create a sizable bloc within your Project Team, your attempts to further any legitimate agenda – particularly and especially the advancement of Project Management capability – has been hopelessly compromised, and, finally, office politics would be to blame.

Now let’s address “culture.” What is culture, exactly? I generally hold that whenever you hear some manager say something like “In order for Project Management to be advanced within the organization, the culture has to be right” as another way of saying “Our selected strategy for setting up our PMO was profoundly flawed, but we’re going to blame everyone else for it anyway.” It’s easier to split the blame a few dozen ways, so that many people bear some small part of the responsibility, than it is to pinpoint one or two individuals, and make a crystal-clear accusation that their lack of management savvy or integrity was the proximate cause of the organization’s lack of advancement in PM capability. Even this latter is far easier than taking a good, long, hard look in the mirror and coming to the conclusion that the selected strategy was wrong-headed in the first place.

Now let’s combine the inchoate “politics” and “culture” causes of PM advancement failure, and address them head-on. How political is your Project Team, or the macro organization where it resides? Are there many Jungle Fighters? Are they influencing the Company Men who, if you recall, tend to assume the persona of the organization around them? Have they formed a sizable bloc? If the answer to these questions is “yes,” then you can, indeed, legitimately blame “culture” for the difficulties in advancing PM within the organization. However, this raises additional questions: Who let in all the Jungle Fighters? How were they allowed to advance? Their very presence screams out that the macro organization has drifted away from a meritocracy. Why did that happen? How did it happen? And, most importantly, did you stand by as it was happening?

The answers to those last three questions is key to understanding how the political monster savaged your Project Team, and led to the culture that has little trouble thwarting attempts at advancing PM. Any deviance from a true meritocracy leads inevitably towards the types of political machinations that undermine the overall organizational culture, and do so to the point that legitimate attempts at advancing PM capability are pretty much doomed from the get-go.

So, sure, go ahead and listen to failed PMO directors blame “politics” or “culture” as the insurmountable barriers that prevented a successful advancement of Project Management within the organization. Just keep in mind that, contrary to the way they’re being presented, they are almost never purely external to the person complaining about them.

 

Posted on: March 18, 2019 09:53 PM | Permalink | Comments (1)

Never Mind PMO Of The Year – This Is The PMO Of The Century

I know what the ultimate Program Management Office is. It produces winners on a consistent basis, and is probably the closest to a pure meritocracy that any organization has ever, or will ever attain. Any American can join, but overseas GTIM Nation needn’t worry – analogous PMOs exist worldwide. Through this PMO, winning strategies and tactics are truly advanced, with no time given for unproven theories or modes of operation.

The organization I’m talking about? The United States Chess Federation.

“Wait just one minute, Michael!” I can hear GTIM Nation say. “The USCF isn’t a Program Management Office at all! It is, in fact, a collection of people who play a board game, albeit a very sophisticated, ancient board game.”

Fair points, all. But consider: what is a Program Office? Is it not a collection of PMs who manage projects sharing a common theme?

“Chess isn’t a project.”

Perhaps, but projects do share many characteristics with games (Game Theory in Management, anyone?). Besides, each game is unique, with a definitive beginning and ending date (time). Its scope is agreed to prior to its start (checkmate the opponent), and resources are dedicated to it.

But in my opinion what makes the USCF the ultimate PMO is the fact that its members’ value is definitively set, and on a purely objective basis: their score. You can be tall or short, skinny or rotund, beautiful or plain, well dressed or scruffy, and it makes absolutely no difference: if you win chess games, your score goes up. If you lose them, your score goes down. Period.

Compare and contrast this refreshingly objective evaluation basis to what happens in Project Management space. We all know of contractor companies that win large contract awards despite having massive overruns and lengthy delays in their histories. These guys lose, and lose big, but never seem to pay any kind of long-term penalty for doing so. Similarly, there are Project Management consulting organizations that deliver substandard services while charging inflated salaries, and yet, somehow, stay in business. Conversely, smaller, less influential contractors, with winning records, are often shut out from even competing for larger procurements.

Then there are the strategies and tactics that go into specific games projects. In the PM world, so-called experts can sit on the sidelines, pushing baseless assertions about the need to, say, time-phase Estimates to Complete, and how this “analysis” is absolutely critical to proper resource assignment, and print the codex of their idle speculations into guidance documents, and never pay any price for their error. Did any – any – of these people actually manage a project where the time-phased ETC prevented an overrun? No? Again, compare and contrast this to Chess Life magazine, which lists hundreds of Master and Grandmaster-level games. The reader can actually see which strategies and tactics worked, and which ones failed.

Chess players within GTIM Nation know that chess openings – canned strategies for the first 5-15 moves – have their own names, like Ruy Lopez, or the King’s Gambit. Indeed, virtually every named opening has at least several variants, each with their own name. Back when I was playing tournament chess, no player who had failed to commit to memory at least three openings (one when playing white, one when playing black and the opponent opened with 1. P-K4, and another when the opponent opened with 1. P-Q4), each with at least four variants (for those not counting, what was needed was a minimum of twelve game templates, played through around the tenth move) had any kind of chance. On the PM side, we have our own set of must-know canned strategies. The manager who does not know the difference between a Work Breakdown Structure and an Organizational Breakdown Structure, or isn’t familiar with how schedule logic can’t define a critical path within a network if most of the activities have been constrained, isn’t going to (or at least shouldn’t) last long in the PM profession.

In chess, winning strategies remain, and losing ones are abandoned. In Project Management, risk management is a multi-billion dollar per year industry, and yet has no real record of ensuring, or even aiding, project success. Ditto with communications management, or any of a dozen other, in my opinion, highly dubious assertions made in the theoretical quarter. These canned strategies simply seem to hang around and eventually become part of the conventional wisdom without ever having been shown to be the proximate, or even material cause of project success. At the risk of pushing my analogy past the breaking point, chess masters don’t have to deal with so-called communications experts, extolling them to keep their team mates (“stakeholders”) informed of what they’re doing, how, why, or when they do it. Nor do they have to listen to risk managers trying to tell them the odds that their opponent will employ a certain strategy (with an 80% confidence interval, don’t you know). Indeed, it’s illegal for a player in a tournament setting to be so advised.

If GTIM Nation comes away from this blog appreciating the strength of the analogy, great. If not, I understand. But to the latter category, let me add but this: The PMO that successfully enacts the USCF’s two main strengths – personnel status based on a pure meritocracy, and the ability to quickly and effectively reject losing strategies – will consistently out-perform the ones that don’t.

Posted on: March 11, 2019 10:23 PM | Permalink | Comments (7)

Is PM As Technically Advanced As It Should Be?

I believe that it’s axiomatic that the two most important questions that any Project Management Information System should be able to accurately answer are:

  • At this rate of performance, when will this project be done?
  • And how much will it cost?

Oh, sure, there are myriad others bits of information that can help shape the PMs’ overall strategy as well as day-to-day decisions, but I consider them secondary to reliably answering the two questions above. Why? Because a manager’s time is finite. The PM who scatters his energies among all of the activities and tasks within the project will be out-performed by the manager who knows which of her activities are doing fine without her attention, and instead concentrates on those tasks that are facing some kind of difficulty.

So, this being the case, has the optimal strategy for providing the answers to the two key questions been identified?

Yes, actually. In Dr. David Christensen’s paper Determining An Accurate Estimate At Completion[i] (National Contract Management Journal, 1993), he establishes that a calculated EAC is consistently and reliably within 10% of a project’s real at-completion costs once the project has passed the 20% completion point. This, in turn, was predicated on other studies that established the Cost Performance Index’s (CPI) stability. Since almost all EAC calculations involve the CPI (in fact, the most common EAC formula is total budget divided by the CPI), the establishment of its stability was, in my humble opinion, one of the great PM information system breakthroughs of the latter part of the 20th century. It presented a quick, easy, and accurate way of answering the two main questions cited at the beginning of this blog.

For those of you who are newer to Earned Value Methodology, the CPI is calculated so:

CPI = Cumulative Earned Value / Cumulative Actual Costs

What’s Cumulative Earned Value?

Cumulative Earned Value = Total Budget * % Complete

The algebra whizzes within GTIM Nation probably already know what I had to be shown, that the Estimate at Completion formula, of dividing the Total Budget by the CPI, can be simplified to:

Estimate at Completion = Cumulative Actual Costs / % Complete

“Impossible!” the purists will say. “That critical piece of information can be accurately calculated with just two fairly-easy-to-acquire data points?” Yes, it can, and it gets better: the same formula works for duration! To know, within ten points of the final outcome, when your project will be finished, simply divide the cumulative duration by the percent complete to get total duration. Subtract out cumulative duration, and that’s how much longer you should expect the project to continue.

Now, has the GTIM blog just obliterated the need for comprehensive cost and schedule baselines, and complex Critical Path Methodology networks? Hardly. Those will always be in demand for advanced PM techniques and strategy development.

What the above assertions do (or at least should) overturn is the whole notion that EACs are best calculated using the “bottoms-up” method, where the PM (or cost analyst, or scheduler) re-estimates the project’s remaining work, adds this figure to the cumulative actual costs, and claims victory. Whereas the list of cumulative actual costs is usually reliable, that other component – the re-estimation of the remaining work – almost never is. Every single line item in the new estimate is subjective. It’s what the PM or estimator believes will happen in the future while ignoring what has happened in the project to that point, especially if a spate of poor performance has hit the project. That, of course, will be corrected going forward, the PM tells himself, as it influences away from reality each of the hundreds of data points going into the new baseline estimate.  The whole bottoms-up approach to the EAC is analogous to a person taking a one-mile hike, and being asked mid-point how long he thinks it will take to complete. Rather than look at his timer and multiply that amount by two, he instead tries to guess how far away he is from the finish line. If he had said prior to beginning the hike that he would finish at a certain time, the answer at the mid-point assessment will almost invariably be the same as it was at the beginning, available performance data notwithstanding.

I have no delusions that the above brilliantly-articulated analysis will bring a sudden halt to the practice of coming up with an EAC based on the bottoms-up approach. As a cliched method, it’s simply too entrenched in the commonly-accepted “wisdom” of PM aficionados and guidance-generators, who would rather embrace conventional wisdom than proven, repeatable management science.

And that preference is but one example of why PM is not as technically advanced as it could be.

 


[i] Retrieved from https://www.researchgate.net/profile/David_Christensen4/publication/228984762_Determining_an_accurate_estimate_at_completion/links/569f9d1908ae4af52546bb07.pdf on March 2, 2019, 13:28 MST.

Posted on: March 04, 2019 09:23 PM | Permalink | Comments (7)

Why PMs Can’t Have Nice Things

I’ve relayed this story before, but it bears repeating for this week’s topic. I was part of a project controls team that had been asked to do some scheduling for a Human Resources department in the process of updating its software system. After pulling together and freezing the baseline, the team performed the first status pull, and took the results to the head of the HR organization. We pointed out that the project was likely to finish late, due to a few tasks on the critical path that were taking longer than expected. This communication was given on a Friday.

“Call in the entire department to work this weekend!” the manager demanded.

We were quick to point out that the personnel involved in the tasks that were pushing the finish milestone out were confined to just a few HR personnel, but mostly in the software engineering team providing support for the overall effort.

“No difference” he maintained. “This project is too important to risk delays while my staff is at home.”

“Just to be clear” we told him, “the vast majority of your department has nothing to do with the specific tasks pushing the project’s end date out. They will have literally nothing to do with accelerating the accomplishment of the activities we’re talking about here.”

The guy just stared at us, and pushed out the e-mail that demanded everyone in his (unfortunate) department work the weekend.

Of course, PMs readily understand the futility, and even the harm, of such a reaction. The project doesn’t benefit, not in the least. The workers’ morale couldn’t have improved upon seeing the e-mail demanding that they abandon kids’ soccer games, birthday parties, or even just relaxing time on their own, doing nothing at all – indeed, common sense informs us that that department’s morale probably cratered, especially since the everyone-must-work-free-overtime tactic seemed to be the go-to solution to this manager.

So why, do you suppose, did he do it?

I think the answer is clear. He probably spent considerable time in a college-level business school, where he learned that the purpose of all management is to “maximize shareholder wealth.” And what tactics make that happen? Well, getting the most out of your assets, of course! Are you the manager of a team of people, who get paid at a certain rate? Well, to advance the function of all management, by this teaching, one must get those assets to work over and above the level at which they are paid. It’s like getting free professional support, right?

I know that the vast majority of GTIM Nation – if not all of us – have experience working for organizations that expect or out-and-out demand “free” overtime. Once the initial thrill of becoming a staff member and having an actual salary fades, we quickly realize that we may have been better off back when we were hourly workers. I was laid off from the first company I worked for out of college after five years for the grave sin of charging two – two! – hours to an overhead account (when I had actually worked five hours on the overhead task), instead of charging every single hour to a direct account. My “manager” had given me the task, and provided the account I was to charge to, without disclosing the secret that this work was expected to be performed for free, and I paid a stiff price for her coyness.

Project Managers know that delivering the customers’ scope on-time, on-budget is the true point of management, and has far, far more weight on overall organizational success than, say, whether or not we should have rented or purchased the copy machine. Asset Managers can’t, or won’t, understand this, because they were subjected to business college professors who sold them on the “maximize shareholder wealth” stuff, including the notion that the return on investment (ROI) is the ultimate evaluator of management decisions. Don’t believe me? Engage in this quick mental exercise: imagine two identically-sized projects. Project A delivers a high-quality scope on-time, under-budget, and the customer is thrilled. The project team is comprised of highly-talented personnel who arrive late, leave early, and consistently fail to observe the company’s dress code, often in dramatic fashion. Project B is late and over budget. However, its Project Team arrives early, works late, doesn’t charge all of the hours they work (i.e., free overtime, conspicuously performed on weekends), and are dressed impeccably. If this happens in your organization, which team is likely to be commended? Disciplined?

You see my point. The Asset Managers have been ensconced in the middle of commonly-accepted business models for so long that they’ve lost sight of the actual point of performing Project Management. It’s kind of a funny coincidence that Generally Accepted Accounting Principles were first propagated at around the same time that Niccolò Machiavelli was writing The Prince. The business model pathologies that cling to the Asset Managers’ strategies like a pair of Tiberian bats have become so reflexive that it’s next to impossible to reason their practitioners out of using them and, by using them, they essentially oppose basic PM tactics.

There are lots of sources of frustration for Project Managers, and some of them are within our own ranks (cough, risk managers, cough). But PM practitioners should feel at liberty to, when confronted with some of the Asset Managers’ goofy strategies, say under their breaths “That’s not the way that works.”

Or, alternately, “This is why we can’t have nice things.”

Posted on: February 25, 2019 09:52 PM | Permalink | Comments (8)

Beware The Spaghetti Diagram

Some years back I had accepted a job to head up a major program office. It had a huge budget, but no cohesive or even usable cost/schedule performance management system in place, and previous attempts at installing one had failed spectacularly. The fellow I was replacing had a Ph.D. in a technical discipline, but didn’t know a fraction of what he thought he knew about Project Management. The person who hired me asked me to attend a meeting of the Program Controls Office team prior to anyone knowing I was about to succeed this Ph.D., and so I did, but made it a point to sit in the back of the rather large conference room and be as small as I could.

The Ph.D. arrived, and strode up to the white board to draw four red triangles across the top.

“These represent the major milestones this program is on the hook for this fiscal year” he began. “Each of them has several subordinate milestones that are part of its scope” he continued, as he drew a few smaller triangles in a row beneath the first triangles, but in a different color.

“We have to provide status on our progress against these milestones to the customer, but the level two milestones are themselves supported by multiple level three milestones” he said as he drew more triangles along the bottom of the white board, in still yet another color.

“Now, these milestones have some relationships we need to discuss” he continued, in what I perceived to be a somewhat condescending tone. “These level one milestones depend on the level two milestones being completed on-time” he said, as he drew lines between the top-tiered triangles and the mid-level ones. “And the level two depend on the level three” as he drew lines between the mid and lowest-tiered triangles. “In addition, some of these milestones depend on the availability of the same facilities or other specific resources,” which he indicated by drawing lateral lines among the lowest level triangles, but in a different color than the lines indicating the hierarchical scope relationship. “And finally, at each level there are going to be milestones that need to be completed prior to the start of others,” leading to more lines being drawn but, since he had run out of different colors, he re-used the color of the level one milestones (red).

Since I was in the back of the room, I had a good vantage point for evaluating the whiteboard from an overall perspective. It was an incoherent mess, but with the level one milestones being represented in red sitting atop smaller triangles and multiple, crisscrossing lines it kind of looked like an immense serving of spaghetti and meat balls.

“As difficult as it may appear, we have to find a way of capturing the scheduling data for these milestones, and report on them accordingly.”

The room erupted in questions.

“Is there a way of prioritizing the level one milestones?”

“Do all the organizations performing the work on these milestones agree on that prioritization?”

“Are all of the projects involved using Critical Path Methodology software, or even the same package?”

The nature of the questions reassured me that the team I was to inherent in a couple weeks knew their stuff, but I became convinced that their (then) director was clueless.

As the meeting wrapped, an old friend of mine who happened to be on the program controls team invited the Ph.D. to sit with me for a moment to get my input. I had made it a point to not say a thing, but now I was cornered.

“Listen, George (not the Ph.D.’s real name), the relationships you just described are well-known aspects of a schedule baseline. When you say that the level one milestones are dependent on the level twos, and so forth, you are describing a decomposition of scope that’s nominally performed by establishing a Work Breakdown Structure. The description of the need to capture common or shared facilities and resources among the milestones is typically handled via a master resource dictionary. And the need to capture which milestones (he meant activities, but I thought it best to use his lexicon) need to be finished before others can start is quantified using schedule logic. Any CPM software package worth the name will be able to accommodate these parameters, and provide the kind of schedule performance information you are looking for.”

My friend who had put me in the hot seat was gesturing towards me as if to say “What he said!”, but George was having nothing of it.

“We’re already arranging a series of coordinated spreadsheets that list all of these milestones, and the relationships I just discussed. We’ll be able to handle it that way.”

I pretty much knew George would reject anything I had to say, but I felt the need to offer it up for rejection nevertheless. The serving of spaghetti-like diagram that he had drawn on the white board provided clear evidence that he was attempting to deal with PM concepts that he didn’t understand, rendering any attempt to convert those concepts into a workable strategy inchoate at best, and utterly misguided (and therefore wrong) at worst.

On the plus side, the whole episode served as a stark example of how, when authors, paper presenters, and, yes, bloggers push figures or tables that indicate entities, functions, or activities encapsulated in shapes that have lines or arrows in between representing some sort of vaguely-defined relationship, it’s a sure sign that the author has a poor grasp of the concepts underpinning the proposed process or strategy, which in turn means it’s probably going to be, well, wrong.

Another unexpected outcome of the meeting: I had to have Italian food for dinner that evening.

Posted on: February 18, 2019 09:58 PM | Permalink | Comments (5)
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