Retrieving Projects from Bad Performance(A Step Towards Easing the Gridlock at Development Center)

Dr. Shridhar LollaDraft2

Jul 2010Bangalore, INDIA(Based on work with organizations, whose business model is ‘project based’.)Key words:

projects, project management, due date performance, performance improvement, dealingwith uncertainties, probabilistic environment, product development, R&D, made to engineer, Theory of Constraints, startups, entrepreneurship, business rules, business fundamentals, built to last, capacitybuilding, entrepreneurial behavior, value system, culture, behavior, business model.

Definition: Prime Rule (

)= Non negotiable rulesPrime Rule #300: A Project must be planned and implemented by incorporating its

probabilistic

nature.Projects are expected to be adventurous, successful completion of which not only givestremendous fulfillment to its team but also provides significant return on investment to itssponsors. However, for teams of over 70% of the projects, working on projects is afrustrating experience that throws their normal life out of balance… and the dream of accomplishing an adventurous journey turns into mirage. The conflict lies in the lack of understanding the very nature of the ‘project’ business and the difficulty fororganizations in the way they work . While projects are ‘probabilistic’ in nature, a vastmajority of organizations tend to apply ‘deterministic’ rules in planning as well as inexecution.This caselet brings out the fundamental nature of project and thereby, exhorts to followrules favorable in achieving success in ‘projects’. The difference between organizationsthat respect these rules and those who do not, is huge (e.g. due date performance of over90% versus less than 40%).________________________________________________________________________

{Start}2 weeks back, I got a call from Anthony. He has been chosen to start an initiative PROP-UP, to improve the overall project management performance of his center. This initiativecame as a result of review of his development center, during visit of the top 5 globalR&D managers, last quarter. They found significant gaps in the effectiveness of the wayprojects are being managed for years.Anthony was working for my group 5 years back, when I had left the center to work on astartup company. Things changed a lot since then. The number of scientists increasedfrom 80 to 800, the count of open projects increased from 15 odd to over 100 andresponsibility for managing several products worldwide increased manifold. This center,is a global R&D center for a fortune 100 engineering giant, with a specialization in

software related products

. When I had left, a systematic project management practicehad just begun and preparation were on for CMMI-level3 certification.This center is quite different compared to the regular software development companies inIndia, in a way that it has a high percentage of people, who come from industrial systembackground and have a high perspective of customers. Further, product development is asignificant part of its activities.Larger number of projects and people, obviously means that it is a space of multi-projects, that has its own complications. Already, symptoms of sluggish execution startedhinting the management to search for areas of improvements. Anthony came to knowfrom others about my involvement in TOC (theory of constraint and its application‘critical chain’ for projects) and how organizations are dramatically improvingperformance of their projects. He wanted me to have a look at issues faced by his centerand help them moving in the right direction.I therefore visited the center today to

listen

to Anthony.Anthony again emphasized that his team is to work on an initiative from topmanagement, it has total buy in from the center’s head and that a corporateannouncement has already been made about PROP-UP and most importantly, a team of 4senior managers has been formed to spear head the initiative.I was conscious that this is a big initiative and therefore, of a huge expectations frommanagement. An initiative that is big, meant bigger goal and by nature, would meantbigger change, not only in processes and tools but also in the behavior of people. Biggerthe change (bigger the goal)… means bigger the resistance to change. I, therefore,cautioned Anthony, to go one step at a time in a measured way. It was very important thatfor such a long journey, he gets wins as early as possible so that it is possible to winsupport and create momentum… otherwise, the task of mobilizing 800 people behind thischange would be a Herculean task.

My first question was, therefore, what the problem is and how big it is. I did not getappropriate answer to this. ‘Project performance is not satisfactory’, was not the rightanswer. I therefore told Anthony that the he needs to set clear objective and metrics, thatcould be a direct indicator of improvement through PROP-UP. It would then make sensefor everybody to effect the right inputs and evaluate performance of their efforts.His colleagues told me that they the center has two goals, 1. Obtain good Project DueDate Performance(DDP) and 2. Reduce Cost. This looked quite weird to me. The reasonbeing that firstly, an organization must have only one goal. Having two goals meansconfusion and conflicts galore, leading to misalignment down the rank. Secondly, thetwo goals are not mutually exclusively. That is, cost is a dependent quantity on DDP andhence, if DDP is kept under control, cost will automatically come under control. Thirdly,‘cost’ is normally not goal of an organization (even if it is a cost center) and is normally,not given as ‘performance target’ to managers. Why? Because, cost is a parameter, if taken as a target, managers start chasing it relentlessly, such that they are more often,detrimental to main purpose of the organization, that I believe is not ‘cost reduction’.Most importantly,

focus

on cost reduction would invariably lead to poor DDP.Since, the center deals in projects, it can be called as a project based organization. Eachproject has a definite scope to be delivered within a cost and time frame. The truth is thata number of projects are abandoned incomplete, and a large number of projects are lateby huge margins compared to their first promised deadline.The normal tendency in project based organizations, is to cut down scope of the projects,in order to deliver them on time. Project managers are worried too much on cost of theproject and are involved in intense haggling with the sponsors about extra fee, when theprojects need to be extended. Thus, projects are actually dominated by scope and costfactors. When these two factors are some how adjusted, the negotiation hinges on thetime. In a majority of the projects, despite all good intentions and compromises on scope& cost, the due date is extended too far, for the reasons that are

seemingly

not in thehands of either parties. Thus, when the project is delivered, the project team looks at the

last agreed

due date of the project and comes out with a performance outcome, that lookslike following on its metrics:Metrics Delivered What it actually means ?Scope 100% Scope as readjusted and agreed (a few weeksbefore project was delivered), and in most casesit significantly deviate from originally agreedone.Cost 100% The extra cost compared to originally estimatedone was readily borne by the client.Time DDP=97% 97% within the ‘last agreed’ date with the client.In most of the cases, the last agreed data is over50% off the first agreed date.