Game Theory in Management

As Project Management seminar season approaches I think it’s a good idea to be able to readily identify which paper presentations are worth attending, and which are a complete waste of time. Of course, most people make this type of decision based on the presentation’s title and the descriptive blurb that accompanies it in the schedule. If that’s not enough, extra clues about a particular session’s efficacy may be gleaned from the presenter’s short biography. However, I’ve been fooled into wasting between an hour and an hour and a half attending presentations that were basically self-aggrandizing theater, time that would have (literally) been better spent at the beach or pool – or, in some cases, taking a nap. In retrospect, I’ve come to the realization that the waste-of-time sessions had some things in common. So, to prepare my readers for the upcoming seminar season, and with a hat tip to John Baez’s Crackpot Index, I’m going to provide a quick-and-easy checklist that will help score the presentations, based on the materials provided when you check in/register for the seminar, or, if necessary, the content of the presentation within its first ten minutes.

The pathology that afflicts many of these seminars is intertwined with something about which I’ve been complaining long and loud, and that’s the lack of actual science in management science. The development of an hypothesis, advancing it towards theory, and disciplined collection of data or the exact staging of an experiment to either prove the theory or disprove the null hypothesis, peer review of the findings, all leading up to a Project Management paper presentation at one of these get-togethers is distressingly rare. Instead, we get inundated with, broadly speaking, three different types of material:

1. Ideas about how risk/quality/communication (or other trendy type) management should be performed, supported by virtually nothing more than speculation or anecdotal evidence.
2. The “Look What We Did On Our Gee-Whiz Project!” presentation, where no real causality analysis goes in to determining how (or even if) the particular project was successful.
3. The bazillionth eat-your-peas-style covering the basics of or scolding about how everyone ought to be doing Critical Path, Earned Value, or any other aspect of traditional PM.

If you can attend a session that avoids these categories, it’s likely to be worth your while. However, for the remainder, which may or may not belong to one of these categories and is, therefore, possibly a waste of time, use the following scoring to quickly determine the sessions’ worthiness of your attention.

Start with -100 points, then:

1. For every assertion without hard backup data that we’re supposed to accept simply because of the authors’:
   1. PMP® certification (add 10 points)
   2. Other PMI® certification (add 20 points)
   3. Other, non-PMI® certification (add 40 points)
   4. Affiliation with PMI® (add 50 points)
   5. Affiliation with another PM-centered professional organization (add 60 points)
2. Every time the paper presenter mentions his college degrees, add another 50 points.
3. Add 25 points for each piece of anecdotal evidence that “supports” the paper’s thesis.
4. Add 100 points if the paper doesn’t have a clearly articulatable thesis.
   1. Add 200 points if the presenter doesn’t know that the presented paper ought to have a clearly articulatable thesis.
5. If the presenter mentions the project-owning organization’s name as a point of reference, don’t add any points. However, if he keeps referencing it as if the name of the organization itself lends credence to his main assertions, add 20 points for the academic infraction, and 100 points because this is simply very irksome.
   1. Add an additional 100 points if this organization happens to be The Pentagon or a well-known aerospace company.
6. Any statistical inference based on fewer than 50 data points, add 25 eval points,
   1. …unless the inference is based on fewer than five observations, in which case add 500 points.
7. Any reference to a deceased person who “almost certainly would have agreed” with the author’s conclusions adds an automatic 200 points,
   1. …especially if the author claimed to have known the person being referenced, and
   2. … another 500 points if the deceased person reference didn’t publish any findings in a peer-reviewed journal, but just happened to be well-known.

If you can make these determinations without actually stepping foot in the hotel ballroom/conference center meeting room, and a full slate of sessions’ scores remain in negative territory, then you’re in great shape. However, if many are in positive score territory, then you can rank them from smallest to largest to maximize the odds that you won’t be wasting your time. Keep in mind that it’s entirely possible that a whole seminar is being put on by a bunch of people who will lean towards flattering themselves, with precious little true management science being performed. If this happens, it’s not really the presenters’ fault – it’s the fault of the committee scoring the original paper proposals.

Then there are those times where you are actually in the beginning of the presentation when the score suddenly moves from sub-zero to positive territory. When this happens, you should have a measured response, based on the following table.

While some of the Recommended Response tactics may seem extreme, consider that they are most likely in response to expertise signalers whose only true objective is to make themselves look better among their peers, at the expense of wasting your time. With that in mind, I would argue that these tactics are fairly benign!

As newly-minted PMPs® come into the Project Management arena, on fire to bring the ideas that their business school professors told them represented authentic project management, even though those very professors haven’t had to beg reluctant Control Account Managers for a status pull since the second Reagan administration (if ever), we more experienced PMs tend to roll our eyes, sigh a portion of patience, and try to channel their energies towards real-world project solutions. How do we do that, exactly? Well, we mentor them, assign them the task of begging status from reluctant CAMs, teach them to drive Critical Path and Earned Value Method software packages, invite them to Change Control Board meetings and project reviews, etc., etc. But there’s something else we do that, I believe, leaves behind an invalid, backward approach to Project Management, and does so in a way that’s singularly hard to avoid.

Yes to my regular readers who are asking themselves at this point “Is this another anti-guidance/procedure rant?” But this time I have something a bit more solid than the garden-variety frustration with the guidance-generating organizations’ overly proscriptive publications.

Procedures Eliminate Options

From the last two blogs, I have made the point that probably the most significant derivative of the Triple Constraint, or Iron Triangle, is the axiom “Quality, availability, affordability: pick any two.” I pointed out last week that, since most government projects are awarded to the lowest bidder, the option for obtaining an end-result that is both high quality and available soon has been taken off the table. The only options left are (1) low quality delivered on-schedule, or (2) high quality, waaayyyy late, either of which is sure to infuriate some set of stakeholders.

The guidance-generating organizations have done something similar, just against another leg of the Triple Constraint. It’s been my experience that these guidance authors, who recognize each other as “experts,” get into the ballrooms of the hotels where their meetings are held, and basically get into expertise-signaling contests, with the level of perceived proficiency being assigned by the number of mostly speculation-driven scenarios where traditional Project Management Information Systems might, just might, deliver an artificial variance. One never hears how a given experiment was set up, or how real-world data was collected in such a manner as to eliminate bias in conclusions or analysis. It makes Kabuki Theater look like King Lear.

As they amp up the “requirements” for setting up and running cost and schedule performance information systems, they sincerely believe that their work will result in an improved or more mature capability in such systems. But it doesn’t, and I know why.

In most cases, what these organization churn out represents invalid strategies to improve PM in general, and performance measuring information systems in particular. For example, one of the Implementation Guides insists that comparing the Basis of Estimate (BOE), on a line-item level, to that Control Account’s actuals, also at the line-item level, represents some form of advanced Earned Value Management capability. It does not. Indeed, the very raison d’etre of EVM stems from the uselessness of comparing budgets to actuals, level of granularity notwithstanding. But that didn’t stop this particular organization from publishing this deviation from legitimate management science.

But What If They’re Right?

For the sake of argument, let’s say that these guidance documents, either from outside organizations or from within your own company, are full of valid, insightful rules, and all the experienced and insightful managers think it’s just swell. Given such a scenario, what could go wrong?

Plenty.

Referring back to the Triple Constraint, this code of valid, insightful rules will inevitably decide a priori one of the aspects of your organization’s PM implementation strategy. It will mandate a certain level of quality rigor, meaning that anyone who uses such guidance has just been deprived of some latitude when it comes to advancing capability maturity. Your “quality” has to be at level X. That means that it will either be expensive, or it won’t be available in a timely manner, perhaps not until way past the time the project should have had a performance measurement baseline and regular reports generated. Since the projects involved can’t be made to wait, that means…

Yeah, that the “expertise” of these guidance-writers is now in more demand, meaning that they should be paid more for (ironically) less flexibility in delivering the products they promote. It’s all very much outside the manner that results from real management science research should be published, in my opinion.

What Will They Do? What Would You Do?

So, as the next generation of Project Managers enters the workplace, and seek their own ways of advancing PM capability, any general guidance that tries to decide for them which two aspects of the Iron Triangle they must accomplish in their specific circumstances won’t help anything. On the contrary, such guidance only limits the nextgen’s latitude of action, and in a way that’s certainly more fatal to successful project completion than any anomalies coming from the Critical Path or Earned Value analysis. This leaves our newbies with one of two options: obey these guidance documents to the letter, and hope for the best; or else respect these guidance documents as they see fit, and be prepared to abandon certain strictures when the situation calls for it. Which set of decision-makers will have the better odds of consistently bringing in their projects on-time, on-budget?

My money is on the latter.

Also known as the “Triple Constraint,” the Iron Triangle is the idea that Scope, Cost, and Schedule are intricately linked, so that, for any given project, it’s impossible to change one while leaving the others as-is. A corollary axiom, “Quality, price, or availability: pick any two,” is an often-overlooked truism, but it drives wide sections of current management science, and can explain why there are never-ending conflicts in the Project Management realm.

War #1: The PM is never good enough.

This is particularly true in the realm of Government-sponsored projects, and is rooted in the strategy of awarding contracts to the lowest bidder. Returning to the “pick any two” rule, there are only three possible management approaches to a given project:

1. If it’s high-quality work, to be delivered on an aggressive schedule, it’s going to be expensive.
2. If it’s high-quality work, but at an “affordable” price, then the number of organizations capable of performing it as such are going to be few and far between. In other words, the customer will need to get in line.
3. If the project does not require high-quality work, there are probably many organizations capable of performing it, meaning that it can be done quickly and cheaply.

However, since the way Governments tend to let procurements is based on the lowest bidder, Approach #1 above has already been ruled out. It never fails: whichever of the remaining two advantages is pursued, the stakeholders invested in the one given short-shrift in the trade-off will complain long and loud. Even in those instances where the product or service being sought requires high quality and an aggressive schedule, criticisms will be levied about its costs being too high. It’s true of roads, defense, medical care – it’s generally impossible to deliver comparatively high-quality, affordable goods or services with a ready availability.

This is where the private sector has a real advantage. In the case of medical services, some companies can set up their business model for those who need immediate care at an affordable price, and staff their clinics with newly-minted doctors and nurses in modest facilities. Other hospitals can concentrate on specialized medicine, with advanced, experienced personnel who can keep prices reasonable because their clients don’t need immediate attention, and can typically wait for an appointment. Still others can charge a premium for those who need to see them immediately for complex problems, and all three of these business approaches can exist side-by-side, with the most successful ones being determined by the individual patients’ choices.

This is rarely the case in Government projects, which tend to impact broad sections of their constituents in such a way that other alternatives are excluded. It’s one of the reasons the practice of formal Project Management techniques is so crucial. Regardless of which two of the three preferred attributes are chosen, the precise relationship among Scope, Cost, and Schedule is locked in when the three baselines are “frozen,” and subject to formal change control. It’s a way of making sure everyone (appropriately) involved agrees on what’s being delivered, at what cost, and when, with claims of deceit or poor performance evaluated in terms of the already-agreed-to parameters.

But it’s also why some Project Managers will never escape accusations of failing some group of stakeholders. (It’s also why the push to “engage all stakeholders” is, I believe, profoundly misguided.)

War #2: Why we’ll never be free of Scope Creep

This war is similar to War #1, since it’s also based on the “pick any two” corollary. Once the project is underway, getting more or better goods or services is the only informally-negotiable member of the Iron Triangle left available. Lower costs are quantified in currency, and schedules depicted in days. But better quality can be requested in many circumstances where those parameters aren’t precisely captured, especially if the improved quality being sought is produced by the project team working harder or longer. Check almost any organization’s Strategic Vision or Corporate Values statement, and the word “quality” will almost always be there, since quality is usually far more difficult to precisely quantify than cost or schedule. One can make a claim to offer a quality good or service with more confidence of never being proved false than the claim of being a the lowest-priced, or fastest available. It’s in this very inchoate characteristic of quality management that those customers set on maximizing their “value” by attempting to informally increase the scope will take advantage, and even seasoned PMs are not invulnerable to them.

In other words, a customer who requests post-contract award a reduction in budget can be easily rebuffed, and the same goes for the customer who desires services or goods delivery sooner than negotiated. But the client who complains about inattention to quality will usually be seen on the side of enlightened management science, and, so positioned, will be next to impossible to contradict or refute.

With standards of living rising precipitously across the globe, I think it’s hilarious to hear some millennials talk about how they are going to “fix” the “mess” they’ve inherited from previous generations. But when it comes to the next generation of Project Managers, I believe they have a case if or when they assert that these two long-standing problems should have been addressed, if not out-and-out solved already.

That being said, they could also easily pass these two problems on to the next next generation of PMs, meaning that these two Project Management wars, among others, are possibly never-ending.

One of the most noticeable changes in Project Management science over the years has to do with its lexicon. As I alluded to in last week’s blog, a project’s time-phased budget used to be known as its Budgeted Cost of Work Schedule, or BCWS, with the more seasoned practitioners simply referring to it as “S.”  Similarly, the Earned Value figure was titled the Budgeted Cost of Work Performed, or BCWP, or, just “P,” and actual costs were the Actual Cost of Work Performed, ACWP, or “A.” This allowed the use of acronyms for acronyms, as in the line chart that showed the cumulative budget, earned value, and actual costs getting the nickname “SPA” chart. In fact, the terms cited above are still on the U.S. Government’s Project Management reports’ official templates.

But the “planned value” people came along and tossed all of that aside. I do not care to debate whether or not the changing terms were a good idea. I simply note that these terms have changed, even though the data items they refer to represent the essential building blocks of conducting cost and schedule performance assessment and reporting. Given the “advancements” in PM science over the past few decades, we’re swerving perilously close to a state of affairs where we curmudgeons aren’t speaking the same dialect, or even language, as those new to the profession. Similarly, the newbies might be having a hard time adjusting to their post-college, professional PM roles, since there’s a bunch of us seasoned PMs out here, trying to get our projects in on-time, on-budget, and tend to not care what academia has to say about the way we do our jobs. So, in the spirit of helping to bridge this generation gap, I submit to my readers the following interpretation table.

If these so-called translations strike you as being overly cynical, allow me to make an appeal to inter-generational justice. If we had to put up with all of these things, then (a) why shouldn’t the next generation?, and (b) why should any of us believe that the next generation of accountants and PM-resistant engineers are any less sure of the veracity of all that pabulum they learned in academia? Remember how irksome we were when we were the “next generation” of Project Management?

But here’s our consolation: in twenty-five years or so, those who are now new to PM will be the ones looking at the incoming generation, and lamenting the ease with which they dispensed with terms like “planned value.” (Hey! Maybe then they’ll actually revert to BCWS!)

As we look at next-generation Project Managers (ProjectManagement.com’s theme for March), I’m reminded of a bit of fun I have at my younger son’s expense. He’s completing his second year of medical school (at one of the United States’ top schools, I must add), and his breadth and depth of knowledge is truly impressive. My undergraduate degree is in English which, on the face of it, would appear to require significantly (if not massively) lesser amounts of academic rigor. In order to lay claim to having the intellectual acuity to even engage him in conversation, I like to remind him that, whereas Shakespeare’s and Milton’s works are considered masterpieces even today, 17^th Century medicine is an embarrassment. In the 1600s, health was thought to be based on a balance of four bodily fluids, or “humours,” one of which was blood. If the doctor believed that your particular ailment needed some sort of re-balancing of these, he would often prescribe bloodletting, usually with leeches. A common “treatment” for a fever was to have the patient swallow a spider.[i]

And, while I’m fairly sure that Shakespeare and Milton will still be considered masters of insight and art four hundred years hence, I’m also confident that what today’s doctors think is advanced medical technique will strike M.D.s in 2418 as hopelessly obsolete, if not out-and-out backwards.

Meanwhile, Back In The Soon-To-Be Project Management World…

Which brings us to next-generation Project Managers. When I was first starting out in project controls, we computed the time-phased budget (Planned Value? Please. It’s the Budgeted Cost of Work Scheduled, or BCWS) by hand, and entered typed it, along with the Earned Value and actual costs amounts, onto the Cost Performance Report templates obtained from the Government Printing Office, using IBM Selectrics (if you have no idea what I’m talking about, I don’t want to hear from you), which were considered state-of-the-art back then (mid 1980s, if you must know). Today’s cost processors pull the BCWS (and, usually, the Earned Value) from the Critical Path Method software package automatically and receive the actual costs straight from the organizations’ general ledger, all but guaranteeing that each component of the main Project Management information system agrees with the others, accomplishing all of this in a fraction of the time it used to take.

But have we really advanced Project Management science?

Consider the fact that, ironically, on average 45% of all Information Technology projects go over budget. That may seem to be an unfair evaluation metric, since both Agile and Scrum were developed as adaptations to traditional PM techniques to address the unique attributes of software development projects. But it does point to a singular fact: the technology surrounding PM may advance, but the organizational behavior and performance attributes of bringing in scope on-time, on-budget remain stubbornly present, even ubiquitous. Why is that?

A Quick Jaunt Back To The 17^th Century

I think it’s for the same reasons that Shakespeare endures while humour-balancing doesn’t. Technology advances, but human nature tends to stay the same, generally speaking. In other words, the next generation of Project Managers may not need to know how to change the ribbon cartridge on an IBM Selectric, but I can almost guarantee you that they will struggle with getting the head of the accounting department to collect costs based on the Work Breakdown Structure, particularly in newer organizations. I often refer to Michael Maccoby’s work in the book The Gamesman, and his four archetypes of workers. But surely the most chilling example of The Jungle Fighter type was clearly illustrated in the character of Iago from Othello. For those of you not current on the tragedies, Othello is married to the beautiful Desdemona, and his main officers and companions are Iago and Cassio. Cassio is loyal, but Iago is a villain who manages to convince Othello that Desdemona is being unfaithful with Cassio. He does so by manipulating people and circumstances to make it appear to the Moor that all of this chicanery is happening right under his nose, and has been for some time, when, in fact, both Cassio and Desdemona are perfectly innocent.

Of course, the end result for your typical Jungle Fighter isn’t the death of those at the top of the organization, but the techniques of calumny, deflection, and altering the narrative for their own selfish ends are common tactics of the archetype. In other words, The Bard had The Jungle Fighter type pegged 373 years prior to the publishing of The Gamesman. It follows, then, that the best insights that we PM-types can pass along to the next generation has to do with things like capability maturity, or adapting traditional practices to better suit new technologies, like what happened with Agile and Scrum development.

The alternative is to continue to try and get pretentious with more “advanced” techniques within the Project Management world, such as more convoluted statistical analysis under the “risk management” rubric, even though there’s very little chance such techniques will stand the test of time. Indeed, if we as the collective PM community continue to promote such techniques, we could at least include a recipe book for making all this spider-swallowing more palatable – for posterity’s sake, of course.

[i] Retrieved from https://www.baus.org.uk/museum/82/17th_century_medicine, 1400 hours on March 3, 2018.