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On Stakeholder Management

On the subject of The Stakeholder Management Perspective to increase the Success Rate of Complex Projects by Massimo Pirozzi

LETTER TO THE EDITOR

1 February 2018

Dear David,

I would like to call to your readers’ attention the very excellent and informative featured article in your January 2018 issue by Massimo Pirozzi, The Stakeholder Management Perspective to increase the Success Rate of Complex Projects.

Pirozzi presents a very convincing argument that effective stakeholder management is truly at the core of achieving project success, especially for complicated and complex projects. He presents a broader than usual definition of project stakeholders:

“Indeed, stakeholders, including the project manager and the project team, are the doers of the project, as well as other stakeholders, including customers, users, and funders, are the target groups of the project itself: business is the domain in which various stakeholders interact to create and exchange value. The relationships among the project stakeholders are, then, real and proper business relationships, which are associated with the generation, and the exchange, of business and/or social value: in general, this flow of value, among the stakeholders, courses through the project with a continuous exchange of resources and results.”

This paper is an important contribution to our understanding of how to achieve true project success in today’s world of complex projects.

All the best,

Russ

Russell D. Archibald, PhD (Hon), MSc
PMI Fellow, PMI Member No. 6
APM-UK Honorary Fellow

San Miguel de Allende, Mexico

 

On the subject of Benefits Realization Management

LETTER TO THE EDITOR

Ref: The Missing Link, Benefits Realization Management…

15 August 2017

Dear Editor,

I’m researching a potentially radical new approach to benefits realization management (BRM) and would welcome any feedback or insights from your readership.

The problem I see with benefits realization, is that it’s more about projects and programmes engaging with beneficiaries to realize benefits rather than the beneficiaries managing the benefits themselves. BRM feels more like a ‘band aid’ to help projects deliver value and manage change in the absence of team managed measures and improvement plans.  Projects should really focus on delivering high quality outputs to time and cost and not delivering the benefits.  That said, the projects must be given guidance on priorities and scope.

Imagine, therefore, a scenario where beneficiaries managed their own improvement plans, for all projects, and were adept at using more relevant and meaningful measures to drive performance improvement.  Ultimately the beneficiaries could fund their part of the project and be accountable for the value being delivered.  This would change beneficiary behaviour to be far more of a project customer, rather than the receiver of project outputs.  Project teams may also be more motivated knowing who is going to benefit from their work and by how much.

Yours,

Andrew Hudson
United Kingdom

 

 

On the subject of project management for city managers

LETTER TO THE EDITOR

Ref: https://pmworldlibrary.net/wp-content/uploads/2017/07/pmwj60-Jul2017-Podger-city-management-as-a-project-featured-paper.pdf

15 August 2017

Dear David,

I appreciate responses to my paper on city management at a project. I am delighted by the request of Project Management Review (PMR), State Grid Corporation of China, to have the paper translated into Chinese. I am also pleased by positive responses from my home-base Indonesia and from Nepal.

I received a kind response from my guru of 49 1/2 years, Alan Stretton, who challenged me on my lack of reference to program and portfolio management, far more directly relevant to city management than project management. He is right.

And so I admit I was not really attempting to create an Urban Management Body of Knowledge, rather I was striving to find what urban leaders can learn from project management. I maintain the biggest difference is the placing of stakeholder management where PMBoK places it last but any elected mayor must place first. But an equally great difference is that project managers serve program and portfolio managers. And program and portfolio managers serve city managers. My UMBoK served as a metaphor for city management, but city management is far richer and complex than that.

I was reminded by an expert of medical projects that project management has developed an awesome jargon that we find when we delve into the chatter of blogs and tweets on project management. The jargon can be a formidable barrier to any politician tempting to learn to be a better leader.

I remain convinced that city management can learn much from project management. There is still much homework to be done but there are many who can do it. And I will be pleased to hear more from other people like me who make this their project.

All the best,

Owen Podger
Bali, Indonesia

 

 

On the subject of project governance

LETTER TO THE EDITOR

21 August 2017

Dear David,

The two interesting papers focused on project governance in your last issue; Is it time for good enough governance? by Prof Darren Dalcher and Project Governance by Martin Samphire both omitted to mention two important ISO Standards focused on this specific area.

ISO/IEC 38500:2015 Information technology — Governance of IT for the organization, applies to the governance of the organization’s current and future use of IT including management processes and decisions. These processes can be controlled by IT specialists within the organization, external service providers, or business units within the organization and is applicable to organizations of all sizes from the smallest to the largest, regardless of the extent of their use of IT. As we all know IT projects are a key point of contention.

More important is ISO 21505:2017 Project, programme and portfolio management — Guidance on governance. This standard describes the context in which the governance of projects, programmes and portfolios is conducted and provides guidance for the governance of projects, programmes and portfolios. It can be used for assessment, assurance or verification of the governance function for projects, programmes or portfolios.

Both standards define the governance of their respective disciplines as a subset or domain of organizational governance, or in the case of a corporation corporate governance, and have a similar view of the difference between governance and management; in essence the governing body sets the objectives and rules for the organisation, management’s job is to achieve the objectives while working within the ‘rules’.

Many of the other documents mentioned in the papers were used as source references in the development of ISO 21505 and are generally compatible with the Standard. However, if we are ever going to get the governance of project, program and portfolio management taken seriously, we need the authority of an International Standard as a starting point, supported by more practical implementation guides such as those developed by the APM in the UK.

Having spent many years working on the ISO committee developing 21505, I know I’m biased, but I strongly believe this standard can be a catalyst for engaging senior executive and company directors to start the journey towards the effective use of project management in organisations.

Regards,

Patrick Weaver
Melbourne, Australia

 

 

On the PMWJ as publisher

LETTER TO THE EDITOR

On the subject of the PM World Journal as resource for sharing “from the trenches”

26 June 2017

Dear David,

You’re doing a fantastic job with PMWJ, filling that gap for guys like me… I spent years figuring out how to share publishable material/resources/news/ideas back to the PM community! I could never understand why more professional magazines weren’t open to contributions from “the trenches”.

Glad we found you…

Best,

Neil Robinson
London, UK

 

On the Gig Economy

LETTER TO THE EDITOR

On the subject of the June PMWJ Editorial on Five Disruptive Trends and “the gig economy”

25 June 2017

Dear Editor

I enjoyed your editorial last edition on disruptive trends. As one who has lived a gig life with over a hundred and fifty gigs in the past two decades, I can assure you, as also Charles Handy writes, a gig life is pretty disruptive, and it is a trend. Forty years ago I was an exception amongst my friends, as I was one of the few who lived on contracts. My friends asked me why I was always changing jobs, and I would reply that I was always coming to the end of work. But twenty years ago the average length of a contract that I was being offered dropped dramatically, and many longer contracts were broken into gigs. In the last year my longest contract has been ten days.

Most gigs come through middlemen, companies that bid for projects with teams in their proposals. Being the best man for the job does not guarantee the position; belonging to the selected team does. My friends who put gig-proposals together for consulting firms estimate they win one job in four or five bids. My experience with applying to consulting firms for a position in their bid is that I get selected for a team about one in three applications. If I was dependent on this standard selection process, I would end up on one gig in fifteen that I apply for. Not good business for me! And if it is not good for most of those playing the gigs, it is not good for the economy.

Fortunately most of my gigs by far have come by other means. And these gigs have provided me with experience that few others have had, and for that I have no complaint, only thanks. These have been the ones that have enabled me to help Indonesia face major challenges, and the ones that changed me the most as well. Sometimes they have been offered to me directly, without even applying. Many have been pro bono. A few times I applied for a job and was not selected, but later when the selected person failed so badly they got sacked, I was asked to salvage the situation. That gives one a good feeling, but shows that selection processes are imperfect.

So here is one of the challenges facing the gig economy. How does it work best if businesses, governments and development partners insist on traditional selection processes? Do they need to change the way they put teams together, and what are the options?

I wish you well on looking further at disruptive trends. Some disruptions of course do not come in trends – Tsunamis and Trump. At least we hope and pray they are not trends. And we must say the tsunami did bring peace to Aceh. So regardless of whether they are trends or not, how can we apply risk reduction to the economies and livelihoods of those who work on gigs within them?

Owen Podger
Bali, Indonesia

On the Stakeholder Perspective

LETTER TO THE EDITOR

On the subject of Massimo Pirozzi’s paper titled The Stakeholder Perspective in the June PM World Journal

14 June 2017

Dear David,

I would like to call your readers’ attention to the excellent featured paper in your June issue, “The Stakeholder Perspective,” by Massimo Pirozzi, in case they missed it. This paper puts the spotlight on project stakeholders and presents a very good summary of all the reasons that we must continually pay attention to the four categories of stakeholders that exist on every project: Providers, Investors, Influencers, and Purchasers, and the four languages that must be used in managing the relationships in each of these four groups within Pirozzi’s “Stakeholder Network.”

Russell D. Archibald, PhD (Hon), MSc
PMI Fellow, PMP, PMI Member No. 6
APM-UK Honorary Fellow
San Miguel de Allende, Mexico

 

Project Categorization Chart

LETTER TO THE EDITOR

On the subject of the Categorization of Projects

17 May 2017

Dear David,

Russ Archibald has suggested that the attached chart adds to the discussion of systematic categorization of different types of projects which is basic to their management by a project manager.  The chart shows that within the life cycle of any project that there most probably will be sub-projects of different categories.

Take a normal construction project.  The conception and or feasibility phase will be a research-type project with white collar-type analysts looking at many different alternatives and needs.

The following design phase will be a normal planning-type project with engineers and managers developing detailed plans and costs.

Perhaps others will want to contribute to this important project management subject.

Bob Youker
Maryland, USA

 

 

On the Big Reverse and Professional Ethics

LETTER TO THE EDITOR

On the subject of the December PMWJ editorial titled “The Big Reverse: Politics, Anti-leadership and the Looming Threat to Professionalism” 

10 March 2017

Dear Editor,

In Response to David Pells’ Editorial titled “The Big Reverse: Politics, Anti-leadership and the Looming Threat to Professionalism and Welcome to the February 2017 PMWJ,” published in the February 2017 edition of the PM World Journal.

I commend the opportunity you took to cite the behavior of the US President to draw attention to leadership and ethics. During my many writings and presentations on the subject of ethics I have, as you did so effectively in your editorial, given emphasis to the relationship between ethics, trust, and leadership. Research has consistently shown that without ethics there can be no trust, and there can be no effective leadership.

I currently serve as the volunteer Chair of the PMI Ethics Management Advisory Group; our group is chartered with the responsibility to work as global advocates for PMI members and non-members regarding the PMI Code of Ethics and Professional Conduct. It is interesting to note that the PMI “Code” does not permit us to sit silently by if we become aware of unethical conduct; one of the mandatory standards states that “We report unethical or illegal conduct to appropriate management and, if necessary, to those affected by the conduct.” That Code further states that we require ourselves and our fellow practitioners to “not engage in or condone behavior that is designed to deceive others.” In other words, when we see behavior that is not honest, we must step in.

Thank you for stepping in.

Michael O’Brochta
Virginia, USA

 

 

On the Big Reverse

LETTER TO THE EDITOR

On the subject of the December PMWJ editorial titled “The Big Reverse: Politics, Anti-leadership and the Looming Threat to Professionalism” 

22 March 2017

Dear Editor,

I read with interest and some surprise the rather different, political editorial piece on the Big Reverse in February 2017. I thought I would leave it for a while – it has never been truer that “a week in politics is a long time”. Who can say what may be happening by the time this communication and other comments may have been published.

I was intrigued around the application of applying established professional ethics for project managers to senior political positions and personalities. In my view such national political leaders are judged by different criteria in the main – notably through their oath of allegiance when taking up office, and the constitution; by the perceptions of public or the electorate; and of their tax returns with other disclosures; and in the media – as well as expectations of being presidential or statesmanlike. These criteria apply in very different ways to professional project managers – if at all – and again with other professionals – in sport, entertainment, health and medicine, law and law enforcement, in the military.

Some may argue that project management, with its art, science and practice, is not a profession – it is a skill, trade, craft or vocation – but that does not stop it being provided professionally. I believe the profession of project management is much more than the (important) ethical aspects mentioned in the editorial piece. For example the Five Dimensions of Professionalism promulgated by APM can be summarised as:

  • Breadth – of knowledge – as in PM Bodies of Knowledge.
  • Depth – of competence – to suit size and complexity of projects.
  • Achievement – as recognised, appropriate qualifications and portfolios of experience.
  • Commitment – to continued professional development (CPD) to maintain and develop skills.
  • Accountability – by adhering to a recognised code of professional and ethical conduct.

It is not a matter of achieving three or four out of these five to be professional; nor applying them now and then. Constant, contextual awareness and application with vigilance is necessary. However this is not easy by any means.

While there is a cadre of fully-committed, full-time managers of projects who understand and undertake such PM professionalism there are also many who are part-time, some-time or one time – with many team members and project colleagues with similar partial involvements. Many people work on more than one commission at a time, and over time, with differing requirements and pressures on their duties and professionalism – within different combinations of contexts. And then there are the possible distractions, directions and (poor) benchmarks which can lead to temptations of inappropriate or less-professional actions or inaction – as highlighted in the article.

At the end of the piece a jumble of ten questions are thrown out for discussion. These are serious and important questions. They are worthy of consideration in calm and serious manners; as part of the serious journey of the development of project management and its professionalism. This journey is taking decades – but it is worth it. In my view it should not be diverted or over-alarmed by passing perceptions of the politics or politicians and the confusion in one country or another.

As we all know no one nation has a dominant position in the world – and that includes the world of project management. We all have our own contexts, circumstances and cultures within our nation states, as well as between our communities and across borders, sectors and industries.

Finally let us not confuse the various “leaderships” – as statesmen in politics; as figureheads in business and academia; as commanders in the armed services; as managers and captains within team sports; as sponsors of projects or programmes and portfolios; with the professional facilitation of successful teams by modest, competent, professional project managers. To adopt such simple comparisons would be unfortunate, misleading and possibly confusing – in my opinion.

It appears that overall on the political leadership and directions in USA that the international jury is still out – but then again it often is.

Best wishes.

Tom Taylor
London, UK

 

 

On Scaling and Tailoring Project Management

LETTER TO THE EDITOR

On the subject of the March 2017 Editorial on the Growing Importance of Categories, Context and Typology in Project Management

13 March 2017

Dear David,

I am very pleased that you are revisiting the issue of scaling and tailoring the project management effort to the characteristics of the project and its current managerial challenges.

This particular topic has been my absolute favorite for three decades. I believe it really poses a cornerstone in modern PM. First, the mindset of leading the project management (including planning, facilitating and evaluating PM) was brought up in 2002 in the National Competence Baseline for Scandinavia, the Scandinavian NCB.

Later, I presented more specifically the mindset and supporting methods in the book “Proactive Project Management”. It could be great for a further dialog if you would join in on one of my monthly webinars where I summarize the mindsets of the book. See the attached invitation.

The reason for me of building on your editorial is to give you the latest news concerning the issue of scaling and tailoring. During the last years of being the manager of IPMA Certification in Denmark, I have facilitated a process of extracting “four perspectives” of both refining the focus during certification as well as the focus during PM education and training.

The four key perspectives are: to be a performing PM practicing the methods; to be a reflecting PM who apply a meta view on the PM processes; to be a value creating PM focusing on creating the right conditions for performing the project process; and, to be a learning PM who continuously improves the process, methods and behavior. In the attached article, issued together with my successor as certification manager, we explain the four perspectives which have gained broad support from our certification assessors as well as training companies.

Am I right that this corresponds quiet well with the line of thinking in your editorial note?

PS: The book “Proactive Project Management” is near to be published in Spanish – I will let you know, when it happens during the spring. I attach an introducing flyer. If you would like to have a copy I ask you to confirm your post address.

Best regards

Morten Fangel
Hilleroed, Denmark

 

 

On the Big Reverse

LETTER TO THE EDITOR

On the subject of the December PMWJ editorial titled “The Big Reverse: Politics, Anti-leadership and the Looming Threat to Professionalism” 

16 February 2017

Dear David,

Thank you for tackling this ‘elephant in the room’ as it relates to our project management profession. I for one completely agree with everything that you have stated regarding the USA’s President Trump’s actions, words, policies and administration. It is obvious that the USA system of government will be severely tested this year and for the foreseeable future, and I retain my optimism that we will emerge stronger ethically and morally as a result of the experiences that will without doubt be like nothing we have ever seen before. I believe that the social media that have enabled this to happen will provide the visibility, transparency, and concerted actions that are needed to overcome the threat.

Any of us, whether executives, project managers, or project team members, whether we are in companies, governmental agencies, universities, or work as independent consultants, have faced the ‘politics’ of bureaucracies large and small. Many of us have seen first-hand the dishonesty, duplicity, hypocrisy, and the several ‘-isms’ that now seem to be rampant in parts of the USA and some other societies. Some have chosen at times to change their employment as a result of that experience, but it is much more difficult to change one’s citizenship. What is truly amazing is that this is happening at the highest levels of the USA federal government. Since I have chosen to live in Mexico as a USA citizen for the past 23 years I have a different perspective than many of what is happening. I am convinced that the testing that is now under way between the USA and Mexico will ultimately benefit Mexico very significantly.

It is more important than ever for each of us, no matter where we reside or what citizenship we hold, that we adhere to our professional, ethical, and moral standards in our personal lives as well as our project management lives.

Sincerely,

Russell D. Archibald

PhD (Hon), MSc, PMI Fellow, APM-UK Honorary Fellow, PMP, PMI Member No. 6

http://russarchibald.com/

https://www.linkedin.com/in/russarchibald

Mexico

 

 

Response to Pat Weaver

LETTER TO THE EDITOR

Response to Pat Weaver’s Letter to the Editor regarding the paper titled “Project Management Certifications Benchmarking Research: 2016 Update”, published in the December 2016 edition of the PM World Journal

By Dr. Paul D. Giammalvo, CDT, CCP, MScPM, MRICS

Jakarta, Indonesia


Dear David,

See my responses to Pat’s posting below [PDG]….

Weaver:        With reference to Dr. Paul D. Giammalvo’s featured paper ‘Project Management Certification Benchmarking Research: 2016 Update’, I believe his focus on Malcolm Gladwell’s 10,000 hour rule is misplaced 2.

The concept of a 10,000 hour rule has been widely criticised in the academic media, not least by the authors of the research paper used by Gladwell as a basis for his rule. It certainly takes effort become an expert but the 10,000 hour maxim was drawn from non-relevant data. In an article entitled ‘Malcolm Gladwell got us wrong: Our research was key to the 10,000-hour rule, but here’s what got oversimplified 2 the authors of the research used by Gladwell as a basis for his ‘rule’, Ericsson and Pool, claim to have been misunderstood and that Gladwell’s 10,000 hour rule over simplifies a complex set of requirements.

[PDG] Agreed and I tried to be clear that I too do NOT agree with Gladwell’s “10,000 hours” and in fact, argue strongly and consistently that it should be 15,000 hours to qualify as a top tier professional. (See the end for the ranges for different job titles)

In the 2016 Update- Page 3:

“While the author recognizes that Gladwell’s “10,000 hour” rule has been and is being challenged on many fronts, by providing a defined zero point and the same units of measure (standardized level of effort hours) we have created a true ratio scale, enabling us to compare the relative level of effort between any two or more credentials.”

2016 Update Page 12- The following 8 GLOBAL project management certifications scored greater than 15,000 Level of Effort hours and/or between 16,200 (ABET PE) and 20,000 (Non-ABET) Level of Effort Hours, earning them honorable mention as also being “legitimate” professional level credentials:

2015 Update- Page 1:

“Some of the key findings from previous year’s research shows that at least in the field of project management, Gladwell’s “10,000 hours” is too low, with 15,000 hours “level of effort” being closer to what it actually takes to produce a “competent” professional level practitioner”

2014 Update- Page 1:

Malcolm Gladwell’s “10,000 Hour” rule came from his 2008 book “Outliers- The Story of Success” where he posited that to become “successful” at anything, required a minimum of 10,000 hours of progressively challenging experience.  And while his research has been challenged, the primary reason for choosing this as a benchmark is by providing a true zero point and having the same unit of measure, it enabled the creation of a ratio scale analysis. So while the “10,000 hour” rule has been used as a benchmark, this research makes a reasonable argument that the number should be closer to 15,000 hours not 10,000, at least for project management.  

Weaver:        As a starting point the choice of 10,000 hours was arbitrary, a study published by Ericsson in 1993 on a group of violin students in a music academy in Berlin found that the most accomplished of those students had put in an average of ten thousand hours of practice by the time they were twenty years old. However no student at 20 years of age is a master of the violin, this level of skill is rarely achieved until the age of 30 or older, after a total of 20,000 hours or more of directed practice – 10,000 hours is only part of the way to mastery. Conversely becoming a master in other disciplines may require significantly less than 10,000 hours. To quote Dr. Francis Mayer of St. Thomas University, Minneapolis (1963) ‘an amateur practices until he can do everything right and a professional [master] practices until he can’t do anything wrong’. If Gladwell had selected a different age for the students a different number of hours of directed practice would have accumulated, but still would not have represented the time needed to achieve ‘mastery’ of the violin.

More (with footnotes and references)…

To read entire document, click here

 


 

About the Author


Dr. Paul D. Giammalvo, CDT, CCE, MScPM, MRICS

Jakarta, Indonesia

 


Dr. Paul D. Giammalvo
, CDT, CCE (#1240), MScPM, MRICS, is Senior Technical Advisor (Project Management) to PT Mitratata Citragraha. (PTMC), Jakarta, Indonesia. http://www.build-project-management-competency.com/.

For 25+ years, he has been providing Project Management training and consulting throughout South and Eastern Asia, the Middle East and Europe. He is also active in the Global Project Management Community, serving as an Advocate for and on behalf of the global practitioner. He does so by playing an active professional role in the Association for the Advancement of Cost Engineering International, (AACE); Construction Specifications Institute (CSI) and the Construction Management Association of America, (CMAA). He previously served on the Board of Directors of the American Society for the Advancement of Project Management (asapm) http://www.asapm.org/ and served previously as the Chair of the Certification Board of the Green Project Management organization. http://www.greenprojectmanagement.org/ He is active as a regional leader and a compensated consultant to the Planning Planet’s Guild of Project Controls. http://www.planningplanet.com/guild

He has spent 18 of the last 45 years working on large, highly complex international projects, including such prestigious projects as the Alyeska Pipeline and the Distant Early Warning Site (DEW Line) upgrades in Alaska. Most recently, he worked as a Senior Project Cost and Scheduling Consultant for Caltex Minas Field in Sumatra and Project Manager for the Taman Rasuna Apartment Complex for Bakrie Brothers in Jakarta. His current client list includes AT&T, Ericsson, Nokia, Lucent, General Motors, Siemens, Chevron, Conoco-Philips, BP, Dames and Moore, SNC Lavalin, Freeport McMoran, Petronas, Pertamina, UN Projects Office, World Bank Institute and many other Fortune 500 companies and NGO organizations.

Dr. Giammalvo holds an undergraduate degree in Construction Management, a Master of Science in Project Management through the George Washington University and a PhD in Project and Program Management through the Institute Superieur De Gestion Industrielle (ISGI) and Ecole Superieure De Commerce De Lille (ESC-Lille- now SKEMA School of Management) under the supervision of Dr. Christophe Bredillet, CCE, IPMA A Level. “Dr. PDG” can be contacted at [email protected].

To view other original work by Paul Giammalvo, visit his author showcase in the PM World Library at http://pmworldlibrary.net/authors/dr-paul-d-giammalvo/

 

 

On the Impact of Disruptive Political Events

LETTER TO THE EDITOR

On the subject of the December 2016 Editorial on “The Potential Impact of Disruptive Political Events” and the response by Max Wideman per 30 December 2016

22 January 2017

This is in response to an interesting discussion started by David Pells, Managing Editor of PM World Journal, in his Editorial of the December 2016 issue. It was followed on by a response by Max Wideman in the January 2017 issue. It is not just a technical discussion; it touches the core question of what the formal and actual role of a project manager is. It also relates to our self-perception and the interactions between us and the physical, economic, social and political world in which we do our projects.

In a world in turmoil, where politicians have become popular by making and implementing decisions without full considerations of their impacts, these are not secondary topics, they deal with a very basic question of our profession: project management must build on professional realism, but how do we behave as realists surrounded by people who consider things easy or turn to panicking.

David Pells with reference to an article published in 2009 raises the point that project managers need awareness of the political and social systems and must consider interactions with them. In essence, Max’s response is that this is not the job of the project manager but of the managers of the performing organization. There is truth in both positions, and while they seem to contradict, together they describe the two fringes of a journey that takes us between two monsters, ignoring politics or getting fully involved in them. Navigating between two monsters is a common task of a project manager when we have to lead our projects between two extremes and at the same time must stay at a sound distance to both.

A very recent example:

The German automotive supplier SHW AG just lost a business with the US maker of electric cars Tesla. The business between the two companies had obviously two phases:

  • A freebie project by SHW to adapt a special axle pump used for hydraulic systems (e.g. for brakes or liquid cooling) to the needs of Tesla and set up a mass production; 1
  • A subsequent production agreed over 5 years with a total value of €100 million (~$110 million) for the delivery of these pumps after start of production (SOP).

The timing of the project is also interesting: It was concluded in September 2016 for first deliveries in Summer 2017, a project duration of just nine months. Normally, automotive projects to design a component and develop the mass production for it are calculated in years. Add Tesla’s habit of making many change requests for such projects in short period of time while expecting that their execution is still part of the freebie nature of the project, and the pressure on SHG becomes understandable. The – as far as I know – rather small margins from the operational production phase were eaten up by the additional costs of managing change requests in the project phase, and the “blitz” nature of the project 2 added to technical risks and consumed a lot of time. The old adage “Fast, cheap, good, you can pick any two“ becomes particularly important, when the team gets overwhelmed with change requests.

From the perspective of SHW, there was another aspect of the business, which obviously went against the interests of Tesla: They have become a German Aktiengesellschaft, a public corporation, in the year 2011 and were in desperate need of success stories, and Tesla was such a story. In addition, almost half of their business so far was done for just one customer (Volkswagen), which posed a high risk for them, given the current upheavals surrounding this company. Volkswagen can be a very complicated customer, but the same is true for Tesla. Inside the high-pressure environment of automotive industry, the two probably pressurize highest.

In order to meet legal requirements, but also to improve shareholder relations and have a great reference to show to new customers, SHW published an ad-hoc disclosure and press release referring to the new business (SHW, 2016). While the name of the customer was not published in the message, the description made it easy to identify who it was.

Tesla gave several reasons for the cancellation:

  • Quality problems on SHW side, disputed by the vendor.
  • Inability to meet the deadline
  • Breach of confidentiality, probably referring to SHW’s ad-hoc message.

Another reason discussed in publications is the influence of the new Trump government in the USA. The President of the USA is not a friend of Tesla’s electric propulsion, he strongly promotes the use of fossil fuels instead. In addition, he imposes a protectionist agenda forcing automotive manufacturers to produce and source in the USA. As he selected Tesla’s CEO Elon Musk as a member of an industrial advisory board and as the decision to cut Tesla’s ties with SHW was made in the direct aftermath of a meeting of this board with Mr. Trump, the idea is at least plausible that firing SHW was a decision made to please and appease Mr. Trump.

Tesla rejected this interpretation in a message to the news agency Reuters:

“The main reason why we now confirm that we cancelled the order is to counter those utopian claims that we were acting in response to political pressure. The fact is the order was cancelled because technical standards weren’t complied with.” (Reuters, 2017a)

The use of the words “utopian claims” seems to rather confirm the assumptions made by German press. When SHW’s fate was described as something comparable to an animal sacrifice on an ancient altar fire offered to a goddess, this was not communicated as a claim but clearly marked as a conjecture, which, in the light of the timing and the personalities involved, was definitively not “utopian”.

So, there are two explanations for the cancellation of the project: The small Suabian SHW left Tesla unhappy with its technical and schedule performance and with their shareholder communications, which Tesla later decried as “plot spoilers” (Reuters, 2017b). Or, as an alternative explanation, SHW was ousted from the project to make Tesla look more favorable in the eyes of a politician. The two explanations are not mutually exclusive.

The example shows that project managers cannot fully exclude the environmental factors from their decision making. If a project will have to run along a roller-coaster track, the project manager has to make sure that it will withstand the g-forces applying on it, and also that the persons sitting inside the project remain safe. But the project manager is not the person to build the roller-coaster tracks.

I am telling my students in class that the first quality of a project manager must be realism, a position between the two extremes of panic and easiness. We do not panic, but we do also not believe that the world will make our job simple and easy. In the case story with Tesla and SHW, Tesla is now able to use know-how that they gained during the 3 ½ months of cooperation with SHW to make the pumps by themselves. SHW has invested heavily in the business with Tesla, and this investment is now lost. I doubt that SHW managers, and also project managers, have brought themselves in a strong position to stop this or to capitalize on the use of their know-how, but we will know this in some years. The project managers at SHW were right to not panic when the customer Tesla stood at their door, but not considering the risks that come with this company and expecting the relation to be easy was definitively an expensive mistake.

So, both David and Max are right. Max in pointing on the limitations of the assignment that a project manager has got (and that in practice are mostly blurred, not sharply delimited) and David in his call to also look beyond these borders.

Kind regards

Oliver F. Lehman

Munich Germany

 

Footnotes

  1. More on Freebie projects in Lehmann (2016, p. 39)
  2. Please see Shenhar & Dvir (2007, p. 47) on the pace dimension of project risk

References

Lehmann, O.F. (2016) Situational project management: The dynamics of success and failure, Boca raton, FL, USA: Taylor & Francis [Online]. Available from:  HYPERLINK https://www.crcpress.com/Situational-Project-Management-The-Dynamics-of-Success-and-Failure/Lehmann/p/book/9781498722612   (Accessed: 26 November 2016).

Reuters (2017a) Tesla confirms it cancelled order with German supplier SHW, 26 January [Online]. Available from:  HYPERLINK http://www.reuters.com/article/shw-tesla-idUSL5N1FG7KZ (Accessed: 2 February 2017).

Reuters (2017b) Tesla explains canceled order with German supplier SHW, 27 January [Online]. Available from:  HYPERLINK http://www.reuters.com/article/us-shw-tesla-idUSKBN15A2XK (Accessed: 2 February 2017).

Sauser, B.J., Reilly, R.R. & Shenhar, A.J. (2009) ‘Why projects fail? How contingency theory can provide new insights – A comparative analysis of NASA’s Mars Climate Orbiter loss’, International Journal of Project Management, 27 (7), October, pp. 665–679 [Online]. Available from:  HYPERLINK http://www.sciencedirect.com.ezproxy.liv.ac.uk/science/article/pii/S0263786309000052 (Accessed: 23 August 2014).

SHW (2016) SHW AG: First major order from world’s leading manufacturer of fully electric vehicles, 30 September [Online]. Available from:  HYPERLINK http://www.shw.de/cms/en/investor_relations/news_investor/ad_hoc_disclosure/ (Accessed: 2 February 2017).

 

On Disruptive Political Events

LETTER TO THE EDITOR

On the subject of the December 2016 Editorial on “The Potential Impact of Disruptive Political Events..”

30 December 2016

Thank you, David. Most interesting!

However, you wrote “Regardless of our personal political opinions (or votes), we need to factor significant potentially- disruptive political events (and changes), including state and local political changes, into our program and project risk planning.”

My view is that such an admonition needs to be qualified.

For example, many of the issues you raise are inevitable political events the impacts of which are unanswerable. I believe that these are beyond the purview of the project manager, at the project level, especially for any project under one year’s duration. That is, unless the event is conceivable within a few months. Even then, the project manager’s job is to push on according to plan until that plan is changed.

Changed by whom is the issue. I believe that for the sort of changes you have highlighted are the responsibility of the corporate overseers of the governance of the project(s) in question. In other words – much higher up the ladder.

Indeed, the questions are better suited to a friendly discussion over a pint at the local bar.

Happy holidays and looking forward to a bright and improved political environment in the New Year, 2017.

Max Wideman
Ontario, Canada

On the Subject of the Editor’s monthly welcome articles

LETTER TO THE EDITOR

4 September 2016

Hello David,

I think the idea to make some comment on the project management world or trends in your editorial is a great idea. I agree fully with your views on experience and believe that we need to make more effective use of the experience available.

On the question of competency, however, I would like to suggest that true project management competency is experience (or at least 80% of competency anyway) and should be assessed in terms of actual performance observed on projects.

Your statement that “project managers are the most experienced leaders in an organization” is very true from two perspectives – firstly in that project managers usually must rely on ‘leadership’ as the tool to drive projects to success (except in highly projectised organisations perhaps) so they will necessarily gain increasing competency in this respect, and secondly they are, by dint of being project managers, positioned in the ‘change’ domain within organisations, and therefore frequently find themselves at the forefront of ‘leading’ change (through stakeholder engagement, etc.).

Best regards,

Chris Bragg

Bahrain

LETTER TO THE EDITOR

On the Subject of the Editor’s monthly Welcome articles

8 July 2016

 

Dear David

You asked for thoughts about the nature of your editor’s welcome. My thinking is broadly as follows.

You are in a unique and rather privileged position. You receive stuff from all over the world, and materials which cover huge areas of the project management avocation. There can’t be any doubt that, from time to time, you see things emerging which no-one else is in a position to see – or certainly not from your perspective. I think many, if not most, readers would welcome your comments when such things do emerge. They could take any form, and may not happen every month. So I don’t see a standardized approach to such comments as being appropriate. Indeed, it would be a bit of a bonus if readers approached your editor’s welcome to each edition thinking, “I wonder what has caught David’s attention this month”.

I am inclined to think that, if you started doing this, it could well lead you towards modifying other aspects of your editor’s welcome. Indeed, a somewhat different approach towards introducing each edition could make it more interesting (whilst still enabling you to acknowledge new or important contributions/contributors). I also think that you do not need to mention all contributions in your editor’s welcome, as you already have an excellent Table of Contents which does that for you.

So these are some preliminary thoughts, for what they are worth. I would be more than happy to have a discourse with you if you think this would help.

Anyhow, keep up the good work!

All the best

Alan Stretton
Sydney, Australia

 

 

 

On the PM Process paper by Lottfy in May PMWJ

LETTER TO THE EDITOR

17 May 2016

Unfortunately, this featured paper Progressive Elaboration of Project Management Processes By Essam Mohamed Lotffy, PMP, CCP (UAE) does not distinguish between the PMBOK® Guide Process Groups and the Project Phases —- unfortunately too many PMP’s do not know that the process groups are not project phases, even though it is mentioned in more than one place in the PMBOK® Guide.

Regards

By Munir Ajam

UAE

 

On the Subject of “How to be a Successful Failure”

LETTER TO THE EDITOR

On the Subject of “How to be a Successful Failure” by David Hillson in the January PMWJ

14 January 2016

Dear Sir,

I am Sushil Sharma from Nepal. I have been member of national body of IPMA since 2009.I have also participated in 5 days of coaching for development program and an international conference held in Nepal. I came to contact PMAN when I wanted to know about the causes of failure. And now when I read Dr David’s article “How to be a successful failure”, I couldn’t stop writing my response to you with gratitude for including such a wonderful article which touched my heart.

Thank you!

Sushil Sharma

Kathmandu, Nepal

 

 

On the Subject of Walt Lipke’s article in the October PMWJ on The To Complete Performance Index

LETTER TO THE EDITOR

9 October 2015

Dear Editor,

I would like to comment on Walt Lipke’s article: “The To Complete Performance Index …an expanded view”.

Although I have no issue with the algebraic calculations, I do have reservations about the conclusion that setting a “universal” value of 1.10 for the TCPI threshold is a valid approach.  My reasoning is that there is a better way of deciding whether a given value of TCPI is achievable, and this does not require calculus:

  • First, evaluate how much you expect to be able to improve on your current efficiency (for time or for cost). Call this “potential percentage improvement” (PPI).
  • Then calculate the required improvement from TCPI and CPI (or SPI in case of time): the “to complete performance improvement index” (TCPII) is TCPI/CPI (in the case of cost – or TCPI/SPI for time).
  • Finally, compare TCPII with PPI to see if you are asking too much (i.e. TCPII > PPI).

In the case given in the article, CPI is given as .85. When TCPI reaches the stated threshold value of 1.1, TCPII would be 1.1/.85 = 130%. The goal is only unachievable if you will be unable to become 30% more effective in controlling costs. You may not yet have reached the point of no return or you may already have passed it.

In addition, the actual estimate for an achievable EAC (AEAC) can be calculated by assuming that the CPI from the current point is enhanced by applying the PPI (ECPI = PII * CPI). With a bit of algebra, this gives AEAC = {EV * (PII-1) + EAC} / ECPI. The variance that this predicts can be used as a valid input to well-informed management decisions.

It is nice to find that Earned Value can still give rise to interesting insights.

Best regards

Crispin (“Kik”) Piney, PfMP, PgMP
France

 


 

October 9, 2015

Walt Lipke Responds:

Kik & David …I have recently performed a study of 25 real projects which confirms my theoretical assertion (that when TCPI exceeds 1.10 recovering the project is unlikely) from the re-published article on TCPI. The new article is to be first published in CPM’s The Measurable News, scheduled for the Winter 2016 issue. Subsequent to MN publication I will submit it to PM World Journal for 2nd Editions publication. In the study a new finding emerged which I believe you will find very intriguing and compelling.

One more thing I would like to pass on to Kik is in his computation method he must take note that the EVM schedule indicators (SPI & SV) fail for late performing projects and thus using SPI in computations cause results to be unreliable. I recommend the Earned Schedule approach to using EVM data. ES indicators have been proven over and over through both application and academic research to provide reliable management information.

Best wishes   ….walt

 


 

October 11, 2015

Kik Piney responds:

Walt,

To be clear: I do agree with your statement that “TCPI has application in evaluating the realism of […] EAC”. I also think that the criticism of SPI and SV in the Earned Value method (EVM) has some … value, but do not believe that it is relevant to my reservations on the setting of a unique threshold for TCPI. The point I was raising was that, unless you know what flexibility you have for improving your CPI, for example by extending the schedule and thereby reducing overtime costs, imposing a predetermined TCPI threshold can be seriously misleading.

In addition, the criticism of SPI in favour of “earned schedule” mainly serves to underline the importance of understanding the domain of applicability of standard EVM. As you say, the schedule performance index (SPI) means nothing once the objective has been missed. But then, SPI was only designed to measure progress towards the objective – making that criticism inapplicable to the situation covered by the article. My argument against a predetermined value of TSPI is therefore also valid in the case where “actual time” (AT) is less than “planned duration” (PD).

Best regards

Kik