With Major League Baseball Spring Training just around the corner, let’s look at what one of the most interesting books I’ve read in a while that can potentially help manage your business, whatever that business may be.
One of the most enjoyable books I’ve read lately is Moneyball: The Art of Winning an Unfair Game by Michael Lewis. Lewis describes how Major League Baseball’s Oakland Athletics, with a “measly” $41 million roster payroll in 2002, figured out how to compete with the “big boys” like the New York Yankees with a $125 million payroll.
Moneyball puts forth the notion that the collective wisdom of baseball experts (players, managers, coaches, scouts, and the front office) over the past century is mostly subjective, and even worse, often unsound. For almost as long as baseball has been around, scouts venture out and evaluate players all over the country, not paying particular attention to statistics, but rather base decisions on the five tools: speed, quickness, arm strength, hitting ability and mental toughness. Add in the nebulous “he looks like a baseball player” in the mix and the odds of finding the next Joltin’ Joe or Hammerin’ Hank are slim to none. This is not to say that scouts don’t look at statistics at all, but the ones they do look at such as stolen bases, runs batted in (RBIs), and batting average were each a bit flawed in their own way.
The Oakland Athletics’ front office took advantage of more empirical gauges of player performance to field a team that could compete successfully against richer competitors in Major League Baseball. The A’s focused their future player evaluation on Sabremetrics, an analytical, evidence-based approach, in an effort to assemble a competitive baseball team, despite Oakland's obvious disadvantage in revenue. As a side note, Sabremetrics is a term derived from the acronym SABR, which stands for the Society for American Baseball Research. The A’s management created an analytical literacy that included both “what to measure” and “how to measure it”.
For hitters, they focused on a wider set of metrics instead of the traditional metrics such as batting average and RBIs. They evaluated offensive effectiveness with an additional two metrics: (1) on-base percentage (OBP) and (2) slugging percentage. Combining these two stats, they formed a new statistic called on-base plus slugging (OPS). In short, they went from a viewpoint of “Can he hit?” to “Can he get on base?” The underlying theory is that the more runners that get on base will yield more runs scored. Of course they also looked at pitching and defensive statistics, but I don’t have time to go into that here.
The A’s believed this causal relationship should improve the chances of winning. And it did. The A’s won the American League West Division title in 2002. Unfortunately they lost the Division Series in the 1st round of the playoffs to the Anaheim Angels.
So how does all this relate to your business? Regardless of what business you are in, there are some traditional metrics that have been used seemingly forever to define “success”. For example, “on time” and “on budget” are the two mantras typically used to define success for project managers. But deep down there may be more metrics that can define success that goes beyond what’s included in the PMBOK.
The challenge for you is to take a critical look at your industry and company to establish an analytical literacy that gives your organization a competitive edge. Good luck on your adventure to find out “what to measure” and “how to measure it”.
Is using project management methodologies enough to ensure a successful business? The simple answer is no. Successfully executing individual projects does not guarantee overall business success unless they are the right projects to meet the business objectives. Project selection is outside the scope of the project management purview. Controlling this selection and prioritization process is the precise purpose of Project and Portfolio Management (PPM). PPM focuses on generating strategic alignment to ensure that we collectively as a business are doing the right things to achieve success.
Complicating this effort is the element of time. As a portfolio of projects is established, each project is not started at a single point in time nor do they typically progress at the same rate. This places each project at unique phases throughout the portfolio’s lifecycle. What this means for the selection process is that it does not occur once. The process must be robust enough to manage the evolution of the portfolio; continuously re-synchronizing the individual projects with the outcomes the portfolio intends to achieve.
In future discussion we will elaborate on three key PPM systems essential to managing business alignment and introduce their methods, disclose how they can be individually leveraged and recommend ways to integrate them continuously to enable business success. Without systems such as these, organizations can often become unbalanced in their tactical approaches to success, under/over-utilized in their resource assignments and so focused on short term results that they lose sight of their strategic long term vision. Implementing these systems in your business will enable your projects to not only deliver their promised results, but also ensure those results are resources and time well spent in the pursuit of success.
Stay tuned to read how Portfolio Prioritization, Risk Management and Performance Monitoring can provide a framework upon which your organization can begin to mature. With these as the foundation for your PPM System you will see the tangible benefits this methodology can provide and accelerate the commitment to enterprise management concepts in a positive atmosphere. These systems are common in their ability to inform decision makers and evolve as business cycles shift while maintaining focus on the long term vision of leadership.
Value is defined by the ratio of Function to Cost (Value=Function÷Cost). People make choices every day based on perceived value. We think about value all the time, whether it is a major purchase such as a car or house, our next vacation destination or even choices as mundane as picking a restaurant or movie. Everyone wants to get the most "bang for their buck". The same holds true in business.
In the business realm, managers make value-based choices for everything from office supplies to construction projects. Different purchasing decisions have different definitions of value. For office supplies, value might be driven by the vendor's ability to provide same day or next day delivery, their selection of products, and of course, cost.
In contrast, construction projects tend to have a much more complex and multi-faceted definition of value. Not to mention the potential for significant financial consequences if the building, road, bridge or utility system doesn't perform as intended.
With the ultimate goal of obtaining maximum value, all phases of a construction project have critical decision points where outcomes can be contrary to that goal. Without a repeatable method to evaluate design and construction options, unnecessary risk may be incurred during the project lifecycle. To help minimize the risk associated with the decision making process, firms are implementing Value Engineering.
Value Engineering (VE) is the commonly used name for the systematic and structured approach used to improve projects, products and processes. Traditional VE efforts have historically been focused at either the project kickoff phase or the construction bid process phase of construction projects. These traditional approaches, while value-added, have some intrinsic failure modes that can be addressed by utilizing VE techniques during all phases of the project.
Construction Project Solutions, LLC (CPS), in partnership with Greene and Associates, has developed the Ci2 Integrated Value Engineering approach for facility design and construction. The Ci2 process integrates VE concepts across the entire project lifespan, from initial design through project close-out. The Ci2 process supports decision making that aligns with both the project goals and overall business goals for everyone involved with the project. This ongoing evaluation process promotes the generation of value creating ideas at all phases of the project and ensures the ideas are evaluated and carried through the project.
To learn more about the Ci2 Integrated Value Engineering approach for facility design and construction, please contact Construction Project Solutions at 865-474-9789.
Why do you need project reviews if you’re not having any issues on your project? I’ve seen organizations where this is viewed as a waste of time and resources in some organizations. However, the value of a regular project management review is tremendous in my opinion. Having a monthly review forces regular updates of project information, regular analysis of project status and is invaluable in communication of project issues, current and potential. A project review should have a standardized format for reports and a set time each month. Project financial, scope and technical status should be reviewed and any issues identified, documented, and communicated to upper management or clients as appropriate. For most projects, earned value analysis is appropriate on some scale and project managers should understand and explain variances which occur. The review should allow for honest dialogue between the project team and management and/or clients on project issues. Open discussion can eliminate potential issues, allow for early resolution of conflicts, identify new risks both positive and negative, and keep all stakeholders on the same page.
As was mentioned in the previous Management Solutions' post, the "why" should be a large part of project controls. Many times I see project controllers getting stuck in a rut of producing reports with minimal or no analysis of the project. There can be several reasons this happens: a lack of time, company expectations, or lack of knowledge or experience to name a few. Reports such as Gantt charts and earned value reports are tools to help with project control, they are not an end product.
As part of the process of developing the project reports, the project controller should investigate any variances or issues that are identified. This could involve looking into the causes and impacts of things such as schedule slippage, changes to the critical path, cost overrun or underrun, EAC variances, changes in resource availability, etc. This information should be discussed with the project team and causes, impacts and any needed corrective actions should be documented.
We need to make sure as project controllers we don't settle for producing reports, or just identifying variances. We need to make sure we understand the data and can explain the causes and impacts of potential issues and use this information to proactively manage our project.
Never underestimate or overestimate the value of planning. When setting a up new program or system, I have seen several groups use the shotgun approach – throw out a lot of data points and use an iterative process to get the end result. While this approach certainly can work, usually a lot of time and effort is spent needlessly trying to sync the vision of the implementers with the vision of the users. Take some time and meet the key team in the program or system and discuss end goals and informational needs of the team. Draft up mock output results and work out the system needs before implementing to streamline the process. On the other hand, don't get so caught up in completing and defining the program or system that it gets caught in a committee loop and never gets off the ground. As with most things in life, balance is the key in getting the most out of the planning process.