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Retrieving Projects From Bad Performance

Retrieving Projects From Bad Performance

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Published by: Shridhar Lolla on Jul 15, 2010
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Retrieving Projects from Bad Performance (Gridlock at Development Center

Dr. Shridhar Lolla CVMark Consulting lolla@cvmark.com Unedited Draft 2nd Jul 2010 Bangalore, , INDIA (Based on interactions with organizations whose business model is ‘project based’. These are small startups as well as large organizations.) Key words: projects, project management, due date performance, performance improvement, dealing with uncertainties, probabilistic environment, product development, R&D, made to engineer, Theory of Constraints, startups, entrepreneurship, business rules, business fundamentals, built to last, capacity building, entrepreneurial behavior, value system, culture, behavior, business model. Definition: Prime Rule (n)= Non negotiable rules Prime Rule #300: A Projects must be planned and implemented by incorporating its probabilistic nature.

Projects are expected to be like adventure, successful completion of which not only gives tremendous fulfillment to its participants but also significant return on investment. However, for participants in over 70% of the projects, it has been frustrating experience that throws their normal life out of balance… and the dream of accomplishing an adventurous journey turns into mirage. The reason lies in the lack of understanding the very nature of the ‘project’ business and the difficulty for organizations in the way they work . While projects are ‘probabilistic’ in nature, organizations tend to apply ‘deterministic’ rules in planning as well as in execution. This caselet is included in CVMARK’s ‘respecting the business’ series, since it brings out the fundamental nature of project and thereby, exhorts to follow rules favorable in achieving success in ‘projects’. The difference between organizations who respect these rules and those who do not, is huge (e.g. due date performance of over 90% and less than 40%, respectively) This is the first caselet related to ‘project based’ business model and it is a part of CVMark’s research on dealing with uncertainties. ________________________________________________________________________

Copyright © 2010, CVMark Consulting, All rights reserved.



2 weeks back I got a call from Anthony. He has been chosen to start an initiative PROPUP, to improve the overall project management performance. This initiatives came as a result of review of his development center, by the top 5 global R&D managers last year. They found significant gap in the effectiveness of the way the projects are being managed. Anthony was working for my group 5 years back, when I had left the center to work on a startup company. Things changed a lot since then. # of scientists increased from 80 to 800, # of projects increased from 15 odd to over 100 and responsibility for managing several products worldwide increased manifold. This center, is a global R&D center for the a fortune 100 engineering giant, with a specialization in software related products. When I had left, a systematic project management practice had just then begun and preparation were on for CMMI-level3. This center is quite different compared to the regular software development companies in India, in a way that it has a high percentage of people, who come from real time industrial system background and have a high perspective of customers. Large # of projects and people, obviously means that it is a space of multi-projects, that has its own complications. And obviously, there are symptoms that started hinting the management to search for areas of improvements. Anthony came to know from others about my involvement in TOC (theory of constraint and its application ‘critical chain’ for projects) and about some of the presentations that I have been making on dramatically improving project performance. He wanted me to have a look at issues faced by his center and help them moving in the right direction to identify the real problems. I therefore visited the center today to listen to Anthony. Anthony again emphasized that this is an initiative from top management, has total buy in from the center’s head and that a corporate announcement has already been made about PROP-UP and most importantly, a team of 4 senior managers has been formed to spear head the initiative. I was conscious that this is a big initiative and therefore, a huge expectations from management. An initiative that is big, means that the goals would be big and such initiative by nature, would mean big change, not only in processes and tools but also in the behavior of people. Bigger the 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 is very important that for such a long journey, he gets wins as early as possible so that it is possible to win support and create momentum… otherwise the task of mobilizing 800 people behind this change will be a Herculean task.

Copyright © 2010, CVMark Consulting, All rights reserved.


My first question was, therefore, what the problem is and how big it is. I did not get appropriate answer to this. Project performance is not satisfactory, was not the right answer. I therefore told Anthony, that he needs to have a measurement, which can be targeted to improvement through PROP-UP. It will then make sense for everybody to effect the right inputs and evaluate performance of PROP-UP. His colleagues told me that they have two measurements on which the center is measured, 1. Project Due Date Performance(DDP) and 2. Cost. This looked quite weird to me. The reason being, firstly, that normally, an organization must have only one goal. Having two goals means confusion and conflicts galore, leading to misalignment down the rank. Secondly, the two goals are not mutually exclusively. That is, cost is a dependent quantity on DDP and hence, 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 given as a target, managers start chasing it relentlessly, such that they are more often than not, detrimental to main purpose of the organization, which I believe is not ‘cost reduction’. Most importantly, focus on cost reduction would often lead to poor DDP. Since, the center deals in projects, it can be called as a project based organization. Each project has a definite scope to be delivered within a cost and time. The truth is that a number of projects are abandoned incomplete. And a large number of projects are late by huge margins compared to their first promised deadline. The normal tendency in project based organization, is to cut down scope of the project, in order to deliver it on time. Project managers are worried too much on cost of the project and are involved in intense haggling with the sponsors about extra fee, when the projects need to be extended. Thus, projects are actually dominated by scope and cost factors. When these two factors are some how adjusted, the negotiation hinges on the time. In a majority of the projects, despite all good intentions and compromising on scope & cost, the due date is extended too far, for the reasons that are not in the hands 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 parameter like following:

Metrics Scope

Delivered 100%

Cost Time

100% DDP=97%

What it actually means ? Scope as readjusted and agreed (a few weeks before project was delivered), and in most cases it significantly deviate from originally agreed one. The extra cost compared to originally estimated one was readily borne by the client. 97% within the ‘last agreed’ date with the client. In most of the cases, the last agreed data is over 50% off the first agreed date.

Copyright © 2010, CVMark Consulting, All rights reserved.


In fact, when I asked Anthony and his team, about the DDP, they said above 90%. I had got the same answer, when I went on a call to meet the engineering team of a German Automotive component company, a few months back. Then I had asked them their definition of DDP. And it turned out that it is the performance of the project compared to the “last agreed date” and not ‘the first agreed’ date. His colleagues then said, “but that is how every body measures”. My answer was, “of course, their results are also the same”. The questions then is “So if the DDP is 97%, then what are you complaining about?” Is not this an extremely good performance? You and your customer must be very happy. But you also say that your customers are not very happy. And that they are becoming unhappier day by day. It can not happen that your measurement shows one thing (that make you happy) and your customers say the other (your customer are unhappy). May be that you need to see the way you measure your success; which is not success for the customers. Which means that your goals are not aligned with those of the customers. It is very evident that the organization needs to correct its measurement and see where it is on that today. Having done that the organization then needs to set an achievable target and initiate improvements that will improve its performance and take it closer to its goal. Without correcting the measurement, having a performance level at 97% on a wrong scale will not allow the organization to target significant improvement. The idea is that performance will improve, if we know the right parameter to measure and the inputs that directly influence these parameters. The question then is in identifying what prevents the organization from achieving a high DDP (from the first committed due date). At the center, people are measured on DDP not only of the project, but also of the tasks. Project managers spend 100s of hours in reviewing each project and each tasks day in day out. They are often over paranoid about the uncertainties and work much beyond 8 hrs schedule, with an intention to getting into details on shortest of tasks. Despite this, a large number of projects miss deadlines. People are good, and they spend more than scheduled time without complaint, but it is not often a pleasant experience to complete a project. People overstretch themselves, imbalance their work and family life, but get frustrated working on projects. There is no doubt about the intelligence, talent and domain knowledge level of people. The company has a reputation of a sort of hiring people with unquestionable technical background; in the language of their competitors, its resource talent is awesome.

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Management has good intention and people are good. If the DDP of the project is poor, despite everybody’s best effort, the problem could be found on one or both of the following: 1. The assumptions made by the team are wrong 2. The implementation is wrong. The problem has to lie in any or both of the above. It therefore, leads me to probe these two. But wait a moment ! Are not we talking about a generic problem that is there in all project organizations? (e.g. the German Automotive’s embedded system R&D center, the Big Pharma’s Innovation Center… and of course, India’s leading software product development company. Not to forget the anemic conditions a majority of startup service companies fall into due to over 100% delays in their DDPs). Yes, we are talking about generic problems that inflict project based organizations. And there are organizations who have come out of these problems. And their DDP (wrt the first committed due date) is above 90%. But organizations are different…. How can we apply the same thing here…? Well let’s understand following: Problems are of two types, which can prevent the organization (whether it is a profit center or a cost center) from achieving its goals. In another way, there are two ways organization can improve its performance. 1. By providing technical solutions 2. By improving logistical issues What it meant in the context of the R&D center. There are technical problems that are linked to software knowledge, code, testing, hardware, power technology, energy, data bases, servers, robotics, drives etc. these problems can be solved by technical knowledge research and actions; and there would be success, failures, slippages, breakdowns that are of technical nature. And when an organization is built a majority of its skills are of technical in nature. But since, we are talking about an organization that is a system, and creating a synergy between people of different skills and teams, it has its own ‘logistical’ issues. While you create a product or a code, moved between people, delivered, it has to wait for decision and actions, it needs to be planned and schedule, it needs to be verified and approved…. Sequenced and timed….managed. In order for the already available technical contribution to make a business contribution, it must pass through ‘logistical problems’ efficiently and effectively. Recent studies by leading researchers reveal that ‘things are more complex than ever’, ‘employees know much more than they can deliver’ and ‘organizations expects them to deliver to the level of their knowledge’. This is clearly a management problem ! The better the organization provides management tools, the better will be the delivery from their talented staff. A majority of the problems faced by project organizations is of this nature.
Copyright © 2010, CVMark Consulting, All rights reserved.


While technical problems are quite different between domains, logistical problems have a large similarities. Hence, business problems that appear in one domain often reflect in others and often routine as well as innovative solutions from one domains are adopted in other domains. This is something that managers need to be increasingly aware of , as they grow. The bottom line is that considering scientific competency of the center beyond doubt, there could be a large possibility that project management competency need to be upgraded. It is like having a good vehicle but a bad road. So repairing road makes much more sense than improving all the vehicles. …. But we are still talking about poor performance of the organization in terms of DDP. It therefore behooves the organization to have a clear perspective of ‘project environment’ before it identifies what to improve. Worldwide projects are given due dates and people are asked to stick to project due date as well as task dues date. The project is handled and people are given targets in a ‘deterministic’ way. The fact is that project environment is ‘probabilistic’ in nature and not deterministic. Anthony teams kept screaming about the uncertainty they have in all projects, saying that their projects are different and that they have no way to meet the dates. They claim that all the planning process is farce, since they do not know which logistical unknowns (and sometime technical unknowns) t will suddenly crop up. Bugs are found late, just when you have started a new task some other task pops up as priority, you plan a meeting and something new crops up, server crashes, dlls are missed, people fall ill, floods occur, flights cancel, Bangalore bandh takes place etc. They say that there is no way, they can do anything about it. Yes they say that it is a ‘probabilistic environment’. We give target date to everything, just because that is the way every body does it in the industry. Of course, they get the similar results. Every project suffers from uncertainty, every body keeps fighting 24x7 to complete the project, but get frustrated at the end. No body is happy (the least is the customer). Some autocratic people are happy that teams are working more than scheduled 8 hrs and they do not ask for extra money. (there is another aspect, since there are uncertainties, sometime certain things are also overlooked and missed) Then I had to tell Anthony that if the project is probabilistic in nature then the planning has to ‘take care’ of probabilistic nature of the project. And there are techniques that he could use. But I cautioned that , implementing the technique without having buy in of people will not be good. What it means ‘to take care of probabilistic nature of the project’? Today when projects are planned, they are broken into tasks and then they are sequenced. After this, the resources are assigned. The resources are then asked to give time

Copyright © 2010, CVMark Consulting, All rights reserved.


‘ESTIMATION’ of their tasks. The time estimations are plugged into the project’s critical path and it is thus scheduled. The issue here is that ‘ESTIMATIONS’ are ‘ESTIMATIONS’. By definition and design, they are NOT accurate figures. Hence, the due date is never ‘deterministic’, but people are ‘MADE TO COMMIT’ to these estimations that are not accurate. Hence, most of the projects are grossly erroneous at the planning stage itself. (it is a different case that people are driven crazy like herds of cattle to meet the due date and they succumb to pressure and work 24x7 instead of planned 8 hrs a day shift) So, in order to deal with this, it is important that project managers are made learn to separate out the uncertainties from the overall estimate and deal with them separately, than dealing with estimates at each task stage. This is important, since at the task level, people must focus on task and be less worried about the decision making related to logistics. Actually, this is not new to finance world, where, while making budget, finance managers are asked to aggressively price each item, but account for uncertainty separately. Actually, by taking actions at planning stage itself , in most cased project cycle time can be cut by 10-25%, while a remarkable and measurable improvement in due date performance is obtained. TOC gives a way to deal with project uncertainty at planning stage. However, it may not be possible for the project manager to do this, unless there is an understanding, acceptance and behavioral change in the organization.. Most importantly, the organization must be looking out for an ambitious improvement in its performance. TOC is not for everybody !!! Anthony, seemed to have suddenly found the spark. I then took him to issues beyond planning and explained him how uncertainties are handled in implementation stage. But I reminded him that TOC has the power to give dramatic improvement and such improvement can not happen unless there is a strong ‘buy in’ from people and they are ready for a massive cultural change. I was not feeling well after my hectic travel schedule, and moved out of the center. Anthony promised to send presentation of his learning from discussion, so that he could systematically present strategy for his group to the center’s director. We had a feeling that perhaps we run a pilot.

Copyright © 2010, CVMark Consulting, All rights reserved.


CVMark Consulting is an independent business-innovation research agency based in Bangalore, INDIA. CVMark Consulting intends to serve business community through advisory, consulting and coaching engagements. As a part of its engagements, it regularly brings out insights, perspectives, research reports, newsletters, issue-oriented reports and other products. This caselet captures description and direction of solution to generic problem faced by business owners. It is intended to share experience of CVMark with a wider business community. This document in part or full can be reproduced subject to a reference to CVMark Consulting and to this document. Factual material contained herein is obtained from sources believed to be reliable, but the publisher is not responsible for any errors or omissions contained herein. Opinions are those of CVMark and are based on research conducted for this report. CVMark holds no responsibility for decisions made on the basis of content of this report.

CVMark Consulting Bangalore, INDIA


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Copyright © 2010, CVMark Consulting, All rights reserved.


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