In my current market, I've noticed a trend where PMs along with the Project team tend to hide dips in Profit margins (due to cost overruns), from Senior Management, when they issue their monthly / weekly progress reports. This is especially evident as the cost to complete is a result of cost balancing to ensure that the profit margin stays consistent at the planned amount. This means that more often than not, Senior Management only becomes aware of cost overruns when it is too late.
So apart from the obvious visibility issue that Senior Management faces on the actual performance of the Project, how could this practice affect:
a) The Project
b) The Organization as a whole
Really looking forward to hearing your views on this, to know if this is a wise spread practice or not and the issues this may invite. Saving Changes...
In the short term, the PMs hiding their metrics might actually get more support, since it looks like their projects are doing better than they really are.
Let's say your PMO has 5 PMs managing 5 big projects, and they're all struggling to stay on schedule and within budget. But one PM obscures this struggle and reports that everything is going well. Executives with oversight might be fooled into thinking this is their top performing PM. They might even put this PM on their next big project, because it's too important to be left with the 4 under-performing PMs.
In the movies, this PM would eventually be found out and receive an embarrassing comeuppance, and an honest PM would finally be recognized. In real life, this dishonest PM will probably start looking for another job when the lies become too difficult to maintain. It will fall to one of the honest PMs to report that the project is not doing well, and the executives will secretly fume to one another that the PMO can't be trusted.
This seems like the most likeliest of scenarios.
The entire outcome seems very disruptive to say the least Saving Changes...
How would a 3 point cost and schedule estimate help exactly?
Hi Sunny;
The intent is to force PM's to put a bit more thought into the cost and schedule "estimates". Tied to that would be confidence levels. If exploited properly, senior management should be asking that cost and schedule estimates be backed by some evidence based analysis, and require that all data should have mandatory confidence levels of lets say not less than 90% at the end of the definition stage. With the 3-Point estimates, at least senior management would have a range between pessimistic and optimistic values that within +/-3 standard deviations (assuming a normal distribution of the data) would give a 98% plus confidence level.
...
1 reply by Sunny Lalwani
Sep 26, 2019 3:58 AM
Sunny Lalwani
...
That seems understandable.
But what prevents the PM from sugar coating the pessimistic value to give a better than actual representation of the Project?
Saving Changes...
Glen DeanGeneral Dynamics Land Systems - CanadaLondon, Ontario, Canada
Sep 25, 2019 4:47 AM
Replying to Sunny Lalwani
...
Hi Steve.
How would a 3 point cost and schedule estimate help exactly?
I think providing 3 point estimates on a live project will just undermine the credibility of the PM in the eyes of leadership, in that it will either display an attempt at 'smoking mirrors', or indecisiveness. Furthermore, the time and effort to create 3 point estimates with objective confidence levels is not value-add to anyone. Best bet is to give your single, honest and well-reasoned estimate.
...
2 replies by Steve Ratkaj and Sunny Lalwani
Sep 26, 2019 4:00 AM
Sunny Lalwani
...
I suppose the reasoning of the 3 point estimate was because the PMs were not providing a crystal clear estimate about project timelines and financials, highlighting "optimum" values for Senior Management perusal.
Sep 26, 2019 8:33 AM
Steve Ratkaj
...
Having worked for GDLS way back when it was General Motors Diesel Division, I can say even now, estimates of both cost and schedule are always optimistic, and this is typical for industry, and us as well. Let me ask a question; With what level of confidence will GDLS deliver on the new contract to DND in terms of schedule and cost? Is it 100%? If not, then what?
Statistically speaking 3-points are much better than a single point and the value added is immense in terms of the unnecessary delays, cost overruns, lost opportunities, etc. The estimates would be even better if based on historical data, which unfortunately most people/ companies/ etc. do not track, but I think this will change with data analytics and AI.
Under pressure, many people have the impulse to try to spin bad news into a positive. . Instead to maintain your credibility it is important to be straightforward, direct, and authentic .
Prepare Report very clear . It should be concise.
When delivering bad news, you may need to explain some factors that went into the outcome. However, you don’t need to spend too much time dwelling on past minutiae. Instead, make an effort to translate what this news means for the future. Assure to top management that you have a plan to tackle it..
...
1 reply by Sunny Lalwani
Sep 26, 2019 4:01 AM
Sunny Lalwani
...
Yes, absolutely agreed.
PMs should be as transparent as possible when reflecting project performance (as per my understanding)
The intent is to force PM's to put a bit more thought into the cost and schedule "estimates". Tied to that would be confidence levels. If exploited properly, senior management should be asking that cost and schedule estimates be backed by some evidence based analysis, and require that all data should have mandatory confidence levels of lets say not less than 90% at the end of the definition stage. With the 3-Point estimates, at least senior management would have a range between pessimistic and optimistic values that within +/-3 standard deviations (assuming a normal distribution of the data) would give a 98% plus confidence level.
That seems understandable.
But what prevents the PM from sugar coating the pessimistic value to give a better than actual representation of the Project?
...
1 reply by Steve Ratkaj
Sep 26, 2019 8:37 AM
Steve Ratkaj
...
People will always "game" the system no matter what you do, but we are trying to apply a lot more rigour to what is officially presented. I believe we are now asking PMs to also a letter of attestation as to what they are presenting etc., so they is a little bit more on the line so to speak.
I think providing 3 point estimates on a live project will just undermine the credibility of the PM in the eyes of leadership, in that it will either display an attempt at 'smoking mirrors', or indecisiveness. Furthermore, the time and effort to create 3 point estimates with objective confidence levels is not value-add to anyone. Best bet is to give your single, honest and well-reasoned estimate.
I suppose the reasoning of the 3 point estimate was because the PMs were not providing a crystal clear estimate about project timelines and financials, highlighting "optimum" values for Senior Management perusal. Saving Changes...
Under pressure, many people have the impulse to try to spin bad news into a positive. . Instead to maintain your credibility it is important to be straightforward, direct, and authentic .
Prepare Report very clear . It should be concise.
When delivering bad news, you may need to explain some factors that went into the outcome. However, you don’t need to spend too much time dwelling on past minutiae. Instead, make an effort to translate what this news means for the future. Assure to top management that you have a plan to tackle it..
Yes, absolutely agreed.
PMs should be as transparent as possible when reflecting project performance (as per my understanding)
I think providing 3 point estimates on a live project will just undermine the credibility of the PM in the eyes of leadership, in that it will either display an attempt at 'smoking mirrors', or indecisiveness. Furthermore, the time and effort to create 3 point estimates with objective confidence levels is not value-add to anyone. Best bet is to give your single, honest and well-reasoned estimate.
Having worked for GDLS way back when it was General Motors Diesel Division, I can say even now, estimates of both cost and schedule are always optimistic, and this is typical for industry, and us as well. Let me ask a question; With what level of confidence will GDLS deliver on the new contract to DND in terms of schedule and cost? Is it 100%? If not, then what?
Statistically speaking 3-points are much better than a single point and the value added is immense in terms of the unnecessary delays, cost overruns, lost opportunities, etc. The estimates would be even better if based on historical data, which unfortunately most people/ companies/ etc. do not track, but I think this will change with data analytics and AI. Saving Changes...
But what prevents the PM from sugar coating the pessimistic value to give a better than actual representation of the Project?
People will always "game" the system no matter what you do, but we are trying to apply a lot more rigour to what is officially presented. I believe we are now asking PMs to also a letter of attestation as to what they are presenting etc., so they is a little bit more on the line so to speak. Saving Changes...
