Perspectives · Benefits Management

Sustainable Project Management: The GPM Reference Guide 2nd Edition

GPM Global is delighted to announce the publishing of the Second Edition of the Sustainable Project Management: The GPM Reference Guide.  The guide is 156 pages and is available on Amazon in both paperback and electronic Kindle formats. Sustainable project management is a rapidly growing discipline. With changing expectations of consumers and investors and the emergence of the millennial generations, organizations are actively incorporating socially responsible and environmentally friendly practices into their operating model. The discipline of project management is also under intense need to not only deliver but to do so in a way that does not create undue impacts on society or the environment. This guide was written by an international team of thought leaders in sustainable project management, including:

• Dr. Joel Carboni
• Bill Duncan
• Mónica González
• Peter Milsom
• Michael Young

This book unpacks the theory and provides a practical approach to ensure that not only are projects are managed sustainably, but the products that the project deliver are also sustainable. Through the detailed PRiSM methodology, this book provides practical steps for project managers to assess and minimize the impact on the planet, on society and create prosperity for all. In this book you will learn:

• Why sustainable project management is essential for modern organizations and why it is the new normal
• The underpinning principles of sustainable project management
• How project managers can be professional and ethical and in doing so be sustainable
• How the PRiSM methodology can be used to assess and minimize project impacts
• The critical roles that governance, benefits, value and organizational change play in ensuring projects are sustainable

Packed with simple and easy to apply concepts, this groundbreaking book from the lead pioneers in sustainable projects is essential reading for project sponsors, project managers in any industry, students of project management and as a textbook for academic purposes. For the Kindle version, please refer to your local Amazon Kindle website (we suggest searching for the ASIN number B07B8P2VZR). For the Paperback version please refer to your local Amazon Bookstore website (we suggest searching for the ISBN number 0578196883). With the Kindle version(s) you can view it online or download the Kindle Application for your computer / mobile / tablet at: https://www.amazon.com/dp/B07B8P2VZR

Or by clicking this button!

Perspectives · Change Delivery

Challenges with Using PERT for Estimating

This post was modified from one I developed several years ago for the Mercure AACE 2013 program I took, called W5_PM_PERT-Challenges. I am still surprised that with the number of project managers I meet who recommend this technique, which effectively puts the Flaw of Averages on steroids. This post is not specifically about sustainable change delivery. It does provide useful considerations, tools and techniques for consideration though for project controls in sustainable projects.

Context

The PERT (Program Evaluation and Review Technique) has been around since the late 1950s, and is frequently mentioned in Project Management estimating, scheduling and costing references.¹  There appears to be several “camps” in regards to scheduling with PERT and presenting this information to senior management. This post will provide a high-level analysis of PERT and conduct an assessment of a simple MS Project schedule using both PERT and Monte Carlo to evaluate the differences in the response.

Development of the feasible alternative

This post will propose that for the purpose of identifying scheduling and costing information to be used for senior management reporting, one of these two alternatives is correct:

• PERT is a generally sound estimating approach
• PERT is a limited estimating approach

Development of the outcome

This post intends to provide a factual analysis of PERT to assist in making decisions on future usage.

Selection of criteria

The following selection criteria / attributes for reference materials were identified:

• Are there any statistical / mathematical constraints or concerns
• Are there situations where PERT is not appropriate

Analysis and comparison of the alternatives

Methodology

For the purposes of this analysis, a simple previous project was used with activities for Peter Milsom as Project Manager, plus an Analyst and a Developer all at $100 and hour for simplicity. We conducted this analysis using MS Project 2003 (yes this is from an older post), the PERT Entry Screen for MS Project 2003, the PERT Entry Screen for MS Excel, and MS Project 2003 using a Monte Carlo add on (using Risk+ and Barbecana Full Monte). In all instances for PERT and Monte Carlo the same optimistic, expected and pessimistic numbers were used.  Also for both the Beta distribution was used. The final plan of record results are provided at the end. 0. Sample MS Project schedule baseline for analysis: 1. PERT Entry Screen for MS Project 2003 (using the MS Project 2003 PA_PERT_Entry Table): 1a. PERT Entry Screen for MS Excel 2007 (only the critical path activities were included up to 3 Sigma): 2. MS Project Monte Carlo (using Risk+ and Barbecana Full Monte) Entry Screen (the curve is a beta curve distribution) with no conditional branching: Though the same data, activities, costing and scheduling were the same, the manner in which the activities and schedule are analyzed are completely different (i.e. Monte Carlo ran 10,000 simulations). The following are the results: 1. Resulting outcome of PERT Analysis (running the MS Project 2003 Calculate PERT Function): 2. Resulting Outcome of Monte Carlo Assessment: 2a. The following provides a range of the costs and percentage probability 2b. The following highlights those activities with the highest cost sensitivity or uncertainty variance.  Focusing on reducing the uncertainty in these activities would reduce the risk and cost variance 2c. Cumulative S-curves of Project Cost 2d. The following provides a range of the project early finish and percentage probability 2e. The following highlights those activities with the highest time duration sensitivity or uncertainty variance.  Focusing on reducing the uncertainty in these activities would reduce the time and cost variance 2f. Cumulative S-curves of Project Early Finish

Selection of Alternative

Once again the alternatives were:

• PERT is a generally sound estimating approach
• PERT is a limited estimating approach

The analysis has referenced several respected sources that have identified a number of statistical and mathematical constraints or concerns with the PERT approach.  Also, running the PERT calculations “properly” for the author was challenging at best. Though commonly referenced, and for simple schedules perceived as easily executed (though to do properly is not straightforward), there are many situations where PERT is not appropriate.

“Scheduling and managing the activities involved in completing a complex, large scale project can be overwhelming. Many managers use project management software that is built on some basic models, but they are not familiar with the underlying models.” “The results are appealing because they appear scientific…  However, the results are misleadingly precise.”⁷

Based on a very simplistic assessment of PERT and Monte Carlo, the following results came out: Based on the literature, and the “quick and dirty” test, for the purpose of identifying scheduling and costing information to be used for providing senior management information to make informed decisions, PERT is only recommended in limited situations.

Recommendations

This was particularly challenging finding straightforward guidance on employing PERT and Sigma for scheduling without concerns over validity or constraints. The recommendation is to use a Monte Carlo based approach. Please refer to the sister post "Sustainable Estimating" for recommendations on how to properly provide sustainable project estimating.  

References:

¹ Malcolm, Roseboom, and Fazar, (1959). Application of a technique for Research and Development Program Evaluation. Operations Research. 7 (5), pp.646 – 669 ² Galway, Lionel, (2004). Quantitative Risk Analysis for Project Management: A Critical Review. 1st ed. USA: Rand Working Paper, WR-112-RC. http://www.rand.org/content/dam/rand/pubs/working_papers/2004/RAND_WR112.pdf ³ Reginier, Eva, (2005). Activity Completion Times in PERT and Scheduling Network Simulation. DRMI Newsletter Naval Postgraduate School, Monterey CA. . 12, pp 1 – 9. http://edocs.nps.edu/npspubs/institutional/newsletters/DRMI/2005/Apr05.pdf ⁴ Reginier, Eva, (2005). Hidden Assumptions in Project Management Tools. DRMI Newsletter Naval Postgraduate School, Monterey CA. . 11, pp 1 – 4. http://www.nps.edu/Academics/Centers/DRMI/docs/1jan05-newsletter.pdf ⁵ Kerzner, Harold (2013-01-28). Project Management: A Systems Approach to Planning, Scheduling, and Controlling (Kindle Locations 15789-15792). Wiley. Kindle Edition. ⁶ Alleman, Glen B. (2009). Why PERT Has Problems. Available at: http://herdingcats.typepad.com/my_weblog/2009/08/why-pert-has-problems.html. . ⁷ Reginier, Eva, (2005). Hidden Assumptions in Project Management Tools. DRMI Newsletter Naval Postgraduate School, Monterey CA. . 11, pp 1 – 4. ⁸ Hubbard, Douglas W. (2009). The Failure of Risk Management: Why It’s Broken and How to Fix It. Wiley. http://www.amazon.com/Failure-Risk-Management-Why-Broken/dp/0470387955/ref=sr_1_1?s=books&ie=UTF8&qid=1442807076&sr=1-1&keywords=the+failure+of+risk+management Hubbard, Douglas W. (2014). How to Measure Anything: Finding the Value of Intangibles in Business, Third Edition. Wiley. http://www.amazon.com/How-Measure-Anything-Intangibles-Business/dp/1118539273/ref=sr_1_1?ie=UTF8&qid=1442806937&sr=8-1&keywords=How+to+Measure+Anything%3A+Finding+the+Value+of+Intangibles+in+Business Savage, Sam L. (2012). The Flaw of Averages: Why We Underestimate Risk in the Face of Uncertainty. Wiley. http://www.amazon.com/Flaw-Averages-Underestimate-Risk-Uncertainty/dp/1118073754/ref=sr_1_1?ie=UTF8&qid=1442807005&sr=8-1&keywords=The+Flaw+of+Averages

Perspectives · Perspectives

Sustainable Estimating

The only certainty is that nothing is certain. Pliny the Elder, Roman scholar, 23-79 CE

Our culture encodes a strong bias either to neglect or ignore variation. We tend to focus instead on measures of central tendency, and as a result we make some terrible mistakes, often with considerable practical import. Stephen Jay Gould, naturalist, 1941-2002

  This post establishes the importance of sustainable estimating techniques.  These techniques can be incorporated into risk management and business case estimating as well as scheduling within sustainable change delivery.  This blog post is part of a series that provides the foundation for understanding sustainable change delivery.

Context

The Risk of Usurping the Sponsor's Authority

I frequently see situations where project teams provide the estimated duration, resources and cost to complete a project as just a series of individual numbers (i.e. six months, five resources and $500,000). Each of these numbers represent a range of numbers each with its own probability of being met. In many industries and organizations, sponsors could not even be advised what the impact of a change in the estimate would do to that probability... if indeed they knew what the probability of success actually was. In short, sponsors are often not provided with the full range of choices in project estimates. Due to this, project teams are usurping the decision maker's authority to decide how much risk to take on and what they'll accept as the probability of success or failure. Giving decision makers a complete picture of estimate uncertainties is vital to effective planning. Telling your sponsor that the project will be done in six months, with five resources and $500,000 leaves out important information and usurps the manager's right to manage risk (i.e. that there is only a 40% chance of success). This post will explain how to deal with this.

Understanding the Dangers of "The Flaw of Averages"

The flaw of averages states: Plans based on average assumptions are wrong on average (Savage, p.3, 2012). A classic example of the Flaw of Averages involves the Statistician who drowned crossing a river that was on average 3 ft. deep, as shown in exhibit 1. This is the classic problem with averages, expected value or central tendency. Here is another simple example.

"Imagine that you and your spouse have an invitation to a ritzy reception with a bunch of VIPs. You must leave home by 6 p.m. or risk being late. Although you work in different parts of town, each of your average commute times is 30 minutes. So if you both depart work at 5:30, then you should have at least a 50/50 chance of leaving home together for the reception by 6 o’clock. Suppose there really is a 50/50 chance that each of you will make it home by 6:00. Then the trip is like a coin toss in which heads is equivalent to arriving by 6:00 and tails to arriving after 6:00. Four things can happen:

• Heads/tails: You are home by 6:00 but your spouse isn’t.
• Tails/heads: Your spouse is home by 6:00 but you aren’t.
• Tails/tails: Neither of you is home by 6:00.
• Heads/heads: Both of you are home by 6:00.

The only way you can leave by 6:00 is if you flip two heads, for which there is only one chance in four" (Savage, p.2, 2012).

Before getting into the specifics, here are some useful perspectives to demonstrate how we should evaluate estimates for tasks, impact, and probability as a range due to the uncertainty.

• Assumptions (Point Value):
  • Best case or ideal value (no uncertainty) provides a fixed number (i.e. exactly 1 day for a meeting).

• However, in Reality:
  • Most activities in Project Schedules are represented as exact values even though exact values are almost never known !
  • Or worse, they are provided a single number which is perceived as an average !

Unfortunately, averages very seldom provide value. When averages are added together, the error rate is exponential. If one estimates 10 tasks will each take 9 months on average, the average duration is statistically over that most of the time. "Imagine a project that requires 10 separate tasks to be developed in parallel. The time to complete each task is uncertain and independent, but known to average 9 months, with a 50 percent chance of being over or under. It is tempting to estimate the average completion time of the entire project as 9 months. For the project to come at 9 months or less, each of the 10 tasks must be completed at or below its average duration. The chance of this is the same as flipping 10 sequential heads with a fair coin, or less than one in a thousand!" The best scenario for estimators (both for scheduling and risk)  is to provide ranges.

• No Assumptions (Ranges):
  • Most things we DO know are better represented by ranges and probabilities – we don’t have to assume anything we don’t really know.
  • This is represented as a “threshold confidence’.

What is required is a range with a probability of success and some form of distribution.

Recommendations

Approach

The first step is in identifying the work or product breakdown structure, often organized by work packages. For each activity a subject matter expert should provide an appropriately detailed explanation, and then start working on the estimated duration. If appropriate ranges should be provided by calibrated experts that also provide distributions, which can then be run through simulations software using Monte Carlo or another simulations tool. The following is a modification of the Humphrey approach to earned value project management from project initiation until the integrated baseline plan. The oval entries represent our recommended modifications to provide sustainable estimations.

Estimator Calibration Training

In order to get the appropriate activity duration estimate though, people have to be trained to provide calibrated estimates. For all estimates, teach subject matter experts and risk owners to provide an upper and lower bound that they are 90% certain contains the correct answer. This normally only takes a couple of hours. The challenge is that decades of studies show that most resources are statistically “overconfident” when assessing their own uncertainty.  Curiously, studies have shown that bookies were great at assessing odds subjectively, while doctors were terrible as were young professionals just out of school. Fortunately studies also have shown that measuring your own uncertainty about a quantity is a general skill that can be taught with a measurable improvement.  Training can “calibrate” people so that of all the times they say they are 90% confident, they will be right 90% of the time. Douglas Hubbard’s book The Failure of Risk Management provides training on calibration, and he also provides a course on this topic. The next two graphs came from Douglas Hubbard's research on the topic of calibration. He discovered that most people are significantly overconfident about their estimates, especially educated professionals: However, as indicated in both the previous and following graph, people can be trained to provide better calibrated estimates to the 90% level: Unfortunately, almost nobody uses these methods. Calibrated Estimating – Calibration Aids Here are some questions to assess your estimate:

• “The Equivalent Bet”: for 90% Confidence Interval questions, which would you rather have?
  • A: Win $1,000 if your interval contains the correct answer
  • B: A 90% chance to win $1,000
• Think of a couple of pros and cons for your range. How could it be wrong? Why do you think it is right?
• Being "right". Are you focusing on being “right” instead of realistically representing your uncertainty?
• Are you hanging on to traditional expectations of “+/- 10%” or similar narrow ranges? Are you resisting wider ranges because you think they are “too wide”?
• Equivalent bet. Are you actually trying an equivalent bet on each activity?
• Try ways to avoid “anchoring”. Don’t think of one number then add and subtract an error. Instead, treat each bound as a separate binary question (e.g. are you 95% certain the value is less than the upper bound?)

Douglas Hubbard's book The Failure of Risk Management provides training on calibration, and he also provides a course on this topic. Here are some other useful techniques for estimating workshops:

• Control the “Story Teller”: There is often a strong temptation to explain in detail complicating factors, exceptions, historical background, etc. Resist the temptation to explain in detail why you have uncertainty. It’s a given that you have it.  Provide the range.
• Remind them to not assume wide ranges are useless: If it represents your uncertainty fairly, that’s the range we want. Whether that range needs to be narrowed is another step.
• Resist “Infinite Decomposition”: You can always compute a value based on other more detailed values but at some point you have to just provide a range.
• Avoid Group-think: There is a tendency for individuals in a group to adopt the confidence of the persons who talk the most. Prompt the quiet to speak. With some groups, individual estimates obtained by email is best.
• Remind them that they are calibrated: Their performance skill at assessing odds has be proven quantitatively.
• Redirect!: When the “explanations” seem to go on too long and they avoid the estimate, prompt them with a question – “Is it more than X?, Less than Y?”

Task Distributions

Once the task has been identified, the range and probability figured out, the estimator needs to be able to provide a distribution for the activity, or an arrangement of values of a duration range showing their theoretical frequency of occurrence. Take the low, median and high duration dates, and assign the distribution occurrence that makes the most sense. For example:

Employ a Monte Carlo Simulation Tool

A Monte Carlo simulation is a computerized mathematical technique that allows project teams to account for risk in quantitative analysis and informs decision makers. Monte Carlo simulation furnishes the decision-maker with a range of possible outcomes, and the probabilities they will occur, for any choice of action. It shows the extreme possibilities—the outcomes for the most conservative decision makers, or the outcomes for the riskiest, along with all possible consequences for middle-of-the-road decisions. These can help guide project teams and sponsors on what options will provide the greatest chance of project success based on the scheduling model and actions input into the model. Monte Carlo simulation performs risk analysis by building models of possible results by substituting a range of values—a probability distribution—for any factor that has inherent uncertainty. It then calculates results over and over, each time using a different set of random values from the probability functions. Depending upon the number of uncertainties and the ranges specified for them, a Monte Carlo simulation could involve thousands or tens of thousands of recalculations before it is complete. Monte Carlo simulation produces distributions of possible outcome values. By using probability distributions, variables can have different probabilities of different outcomes occurring.  Probability distributions are a much more realistic way of describing uncertainty in variables of a risk analysis. Following are a very simplified series of images for a Monte Carlo tool called Risk +. Personally I prefer Barbecana's Full Monte or Palisades @Risk.

Inputs

The entry screen is normally fairly straightforward. One identifies the activity name, minimum effort, most likely effort, maximum effort, and the nature of the distribution curve:

Simplified examples of the distribution curve are listed below:

The option for the number of iterations helps to provide a greater sample and reduce uncertainty. It also helps to chose which analysis option is desired, which will be described in the following images.

Outputs

If the schedule and costs acceptable probability do not align with the organizations project constraints, such as completion date or overall cost, are there activities with ranges that need to be removed or tightened up or analyzed further to reduce uncertainty and fit within the known constraints?

The following two images provide an example of potential / possible completion dates and cost based on probability. The information for the sponsor is that the current plan has a 50% chance of success of meeting the February 20 20## date AND of spending 598K or less AND delivering all of the project outputs… i.e. the probability of meeting or improving on that estimate.

 

The following is an example of potential / possible completion costs based on probability:

 

The following is an example of a sensitivity analysis, which highlights those activity ranges that may require more research and refinement:

 

Sensitivity analysis reinforces the value of information, showing what activities require more research to improve understanding and estimates.

 

Conclusion

The project schedule is made up of estimated activities which will define possible boundaries such as time and cost. However, projects normally have thresholds or constraints, such as completion by February 15 20## and of spending less than 500K. If the project thresholds are NOT within the range of possible values, then there is a chance that the project team and sponsor would make different decisions with better measurements. Giving decision makers a complete picture of estimate uncertainties (and choices / impact) is vital to effective planning. GPM Global recommends conducting a P5 assessment, calibrating estimators, using ranges and distributions for the appropriate activities, and employing a Monte Carlo assessment tool to properly analyze the project schedule, costs and probabilities to make informed decisions about the project's viability and success.  

REFERENCES

Alberts, C. J., Dorofee, A. J., Higuera, R., Murphy, R. L., Walker, J. A., & Williams, R. C. (1996). Continuous Risk Management Guidebook.  http://resources.sei.cmu.edu/library/asset-view.cfm?assetid=30856 APM Risk Management Specific Interest Group. (2010). Project Risk Analysis and Management Guide 2nd Edition. https://www.apm.org.uk/PRAMGuide Association for Project Management. (2014). Project Risk Analysis and Management Guide, Second Edition. Retrieved September 21, 2015, from http://www.amazon.com/Project-Risk-Analysis-Management-Guide-ebook/dp/B00JJ0MSRK/ref=sr_1_1?s=books&ie=UTF8&qid=1442807872&sr=1-1&keywords=project+risk+analysis+and+management+guide Bacon, R., & Hope, C. (2013). Conundrum: Why every government gets things wrong and what we can do about it by. Retrieved October 18, 2015, from http://www.amazon.com/gp/product/B00LLP1HK0?keywords=Conundrum%3A Why every government gets things wrong and what we can do about it&qid=1445198964&ref_=sr_1_2&sr=8-2 Baxter, Keith (2012). Risk Management: Fast Track to Success. Financial Times/ Prentice Hall Limited. http://www.amazon.com/Risk-Management-Fast-Track-Success-ebook/dp/B00A8N8I6C/ref=sr_1_1?s=books&ie=UTF8&qid=1442809841&sr=1-1&keywords=Risk+Management%3A+Fast+Track+to+Success Capers Jones. 1994. Assessment and Control of Software Risks. Yourdon Press, Upper Saddle River, NJ, USA. http://www.amazon.com/Assessment-Control-Software-Risks-Capers/dp/0137414064/ref=sr_1_1?s=books&ie=UTF8&qid=1442808208&sr=1-1&keywords=Assessment+and+Control+of+Software+Risks Sagan, Carl (1997). The Demon-Haunted World: Science as a Candle in the Dark. Ballantine Books. http://www.amazon.com/Demon-Haunted-World-Science-Candle-Dark/dp/0345409469/ref=sr_1_1?ie=UTF8&qid=1446422119&sr=8-1&keywords=The+Demon-Haunted+World%3A+Science+as+a+Candle+in+the+Dark Connolly, T. & Arkes, H.R. & Hammond K.R. (1999).  Judgment and Decision Making: An Interdisciplinary Reader (2nd ed.).  Cambridge Series on Judgment and Decision Making. Cambridge University Press. http://www.amazon.com/Judgment-Decision-Making-Interdisciplinary-Cambridge/dp/0521626021/ref=sr_1_1?ie=UTF8&qid=1445222869&sr=8-1&keywords=Judgment+and+Decision+Making%3A+An+Interdisciplinary+Reader Dallas, M. F. (2008). Value and Risk Management: A Guide to Best Practice. Retrieved September 21, 2015, from http://www.amazon.com/Value-Risk-Management-Guide-Practice-ebook/dp/B0014TS2IS/ref=sr_1_1?s=books&ie=UTF8&qid=1442809546&sr=1-1&keywords=value+%26+risk+management+a+guide+to+best+practice Down, A., Coleman, M., & Absolon, P. (1994). Risk Management for Software Projects. Retrieved September 21, 2015, from http://www.amazon.com/Management-Software-Projects-Mcgraw-Hill-Hardcover/dp/B011YTH38W/ref=sr_1_2?s=books&ie=UTF8&qid=1442808709&sr=1-2&keywords=%22risk+management+for+software+projects%22 Hillson, D. (2007). Understanding and Managing Risk Attitude, Second Edition. Retrieved September 21, 2015, from http://www.amazon.com/Understanding-Managing-Risk-Attitude-Paperback/dp/B010EW7C7W/ref=sr_1_4?s=books&ie=UTF8&qid=1442810145&sr=1-4&keywords=understanding+and+managing+risk+attitude Hillson, D., & Simon, P. (2012). Practical Risk Management: The ATOM Methodology, Second Edition. Retrieved September 21, 2015, from http://www.amazon.com/Practical-Risk-Management-Methodology-Second/dp/1567263666/ref=sr_1_1?s=books&ie=UTF8&qid=1442809066&sr=1-1&keywords=practical+project+risk+management+the+atom+methodology+2nd+edition Hooker, Worthington (1849). Physician and Patient; Or, A Practical View of the Mutual Duties, Relations and Interests of the Medical Profession and the Community. Baker and Scribner. http://www.amazon.com/Physician-Patient-Practical-Relations-Profession/dp/B008UFAA6G/ref=sr_1_1?ie=UTF8&qid=1446421407&sr=8-1&keywords=Physician+and+Patient%3B+Or%2C+A+Practical+View+of+the+Mutual+Duties%2C+Relations+and+Interests+of+the+Medical+Profession+and+the+Community. Hubbard, Douglas W. (2009). The Failure of Risk Management: Why It's Broken and How to Fix It. Wiley. http://www.amazon.com/Failure-Risk-Management-Why-Broken/dp/0470387955/ref=sr_1_1?s=books&ie=UTF8&qid=1442807076&sr=1-1&keywords=the+failure+of+risk+management Hubbard, Douglas W. (2014). How to Measure Anything: Finding the Value of Intangibles in Business, Third Edition. Wiley. http://www.amazon.com/How-Measure-Anything-Intangibles-Business/dp/1118539273/ref=sr_1_1?ie=UTF8&qid=1442806937&sr=8-1&keywords=How+to+Measure+Anything%3A+Finding+the+Value+of+Intangibles+in+Business Kahneman, Daniel (2011). Thinking, Fast and Slow. Random House, Inc.. http://www.amazon.com/gp/product/0374533555?keywords=Thinking%2C%20Fast%20and%20Slow&qid=1445222667&ref_=sr_1_1&sr=8-1 Kendrick, T. (2015). Identifying and Managing Project Risk: Essential Tools for Failure-Proofing Your Project, Third Edition. Retrieved September 21, 2015, from http://www.amazon.com/Identifying-Managing-Project-Risk-Failure-Proofing/dp/0814436080/ref=sr_1_1?s=books&ie=UTF8&qid=1442809235&sr=1-1&keywords=%22identifying+and+managing+project+risk%22 Koletar, J. W. (2010). Rethinking Risk: How Companies Sabotage Themselves and What They Must Do Differently. Retrieved September 21, 2015, from http://www.amazon.com/Rethinking-Risk-Companies-Themselves-Differently/dp/B005B1LVF6 Markowitz, H. M. (1957, 1991, 1997). Portfolio Selection: Efficient Diversification of Investments, 2nd Edition. Blackwell Publishers, Inc., Malden, Mass.  http://www.amazon.com/Portfolio-Selection-Efficient-Diversification-Investments/dp/1557861080/ref=sr_1_1?ie=UTF8&qid=1447198569&sr=8-1&keywords=Portfolio+Selection%3A+Efficient+Diversification+of+Investments OGC - Office of Government Commerce (2012). Management of Risk: Guidance for Practitioners 2010 Edition, Third Edition. The Stationery Office (TSO).  http://www.amazon.com/Management-Risk-Guidance-Practitioners-3rd/dp/0113312741/ref=sr_1_1?ie=UTF8&qid=1442806817&sr=8-1&keywords=management+of+risk OGC - Office of Government Commerce (2009). Managing Successful Projects with PRINCE2™ 2009 Edition. http://www.amazon.com/gp/product/0113310595?keywords=prince2%202009&qid=1445050419&ref_=sr_1_1&sr=8-1 Reuvid, J. (2014). Managing Business Risk: A Practical Guide to Protecting Your Business, Tenth Edition. Retrieved September 21, 2015, from http://www.amazon.com/Managing-Business-Risk-Practical-Protecting/dp/0749470437/ref=sr_1_1?s=books&ie=UTF8&qid=1442809984&sr=1-1&keywords=managing+business+risk+a+practical+guide+to+protecting+your+business Savage, Sam L. (2012). The Flaw of Averages: Why We Underestimate Risk in the Face of Uncertainty. Wiley. http://www.amazon.com/Flaw-Averages-Underestimate-Risk-Uncertainty/dp/1118073754/ref=sr_1_1?ie=UTF8&qid=1442807005&sr=8-1&keywords=The+Flaw+of+Averages Savage, Sam L. (2012). The Flaw of Averages: Why We Underestimate Risk in the Face of Uncertainty. Wiley. http://flawofaverages.com/ Savage, Sam L., "The Flaw of Averages," Harvard Business Review, November 2002. http://www.ideafinder.com/history/inventions/story074.htm Sharpe, W. F. (1964). Capital Asset Prices: A Theory of Market Equilibrium under Conditions of Risk. The Journal of Finance, 19(3), pages 425–442. http://www.jstor.org/stable/2977928 Taleb, Nassim Nicholas (2010). The Black Swan: Second Edition: The Impact of the Highly Improbable Fragility" (Incerto). Random House Publishing Group. http://www.amazon.com/Black-Swan-Improbable-Robustness-Fragility/dp/081297381X/ref=sr_1_2?ie=UTF8&qid=1445222701&sr=8-2&keywords=black+swan Thibault, J. M. (2013). Calculating Uncertainty - Calculating Uncertainty. http://www.smpro.ca/sipmath/Calculating Uncertainty John Marc Thibault.pdf Thibault, J. M. (2012). The Art of the Plan: Requirements, Models, and Probability Management. https://www.createspace.com/3966560 Westerman, G., & Hunter, R. (2007). IT Risk: Turning Business Threats into Competitive Advantage. http://www.amazon.com/Risk-Turning-Business-Competitive-Advantage/dp/1422106667/ref=sr_1_1?s=books&ie=UTF8&qid=1442808278&sr=1-1&keywords=it+risk+turning+business+threats+into+competitive+advantage

Perspectives · Benefits Management

The necessity for Project Management skills: The transition to freelance and project work

The Only Person that Likes Change is a Baby with a Wet Diaper. Anon

By nature we hate change; seldom will we quit our old home till it has actually fallen around our ears. Thomas Carlyle(1795-1881)

Not everything that is faced can be changed, but nothing can be changed until it is faced. James Baldwin(1924-1987)

When you're finished changing, you're finished. Benjamin Franklin(1706-1790)

Progress is impossible without change, and those who cannot change their minds cannot change anything. George Bernard Shaw(1856-1950)

This post will provide some references around how projects are becoming the new normal, and also provide some interesting trends and stats around how much we invest in projects. This has created an evolving engagement model for people working with organizations, and around the organizational evolution towards "projectification".  Based on these trends, we highlight how everyone should recognize the necessity for project management skills, and what can be done to develop these in the new work environment.

Projects are Becoming the New Normal

Over the past decade, there appears to have been a global transition away from the employee model towards a more freelance, contract or project model.  Often referred to as the Hollywood model:

• A project is identified; a team is assembled; it works together for precisely as long as is needed to complete the task; then the team disbands.
• This short-­term, project-­based business structure is an alternative to the corporate model, in which capital is spent up front to build a business, which then hires workers for long-­term, open-­ended jobs that can last for years, even a lifetime.
• Distinct from the Uber-­style “gig economy,” which is designed to take care of extremely short-­term tasks, manageable by one person, typically in less than a day.

This has a number of exciting implications both for management consulting (specialist advisory expertise) and project management, though this blog post will deal with the latter. There have been several thought leaders supporting the observation about a transition towards freelance and projects.  Seth Gordin observed that people without specialized skills are finding it harder to find work, what he called the end of “the end of the average worker.”  Daniel Pink wrote in the Free Agent Nation (2001) the emergence of “Supertemps,” who are "top managers and professionals, trained at the top schools, who have chosen to pursue contract work over regular employment."  Malcolm Galdwell's book Outliers (2011) describes how all experts develop their special skills over long periods of time (7+ years to become excellent), and ultimately become world-class in a very focused area of expertise and skill. In line with this, jobs are becoming more specialized and we are working more in teams and cross functional boundaries. As professionals our success is being redefined by expertise, not span of control.  In today's high performing companies, people now take on "roles" not "jobs." They are responsible for "tasks" and "projects" and not simply "functions."

Demonstrative Trending for Projects

For context, it is estimated that one-third of the global gross domestic product (GDP) in society is expended on projects (Turner et al., 2010)(Schoper et al., 2018). 

Exhibit 1: Percentage of Worldwide GDP on Projects

So for 2016, based on the International Monetary Fund's (IMF) calculations (IMF, 2017), that would be 30% of $75,212,700,000,000 (USD) (Statistica, 2016)... or approximately $22 (USD) trillion spent on projects annually (using the American system for naming large numbers... Rowlett, 2001). Possibly more interesting though, is the fact that this percentage of Global GDP has been increasing over the past century as presented in Exhibit 2.  

The Changing Engagement Model

So if the world is focusing more on team and project work, the role of the project manager is expanding.  If one takes into account the complexity and speed required of these new project engagements, this demand is amplified exponentially. For more background on the changing employee model, it has been a recent trend towards recommending the following (borrowed from the Psychology Today 2013 article "The End of Careers As We Know Them":

• Realize that the old social contract—employee work in return from employer loyalty and job security– is dead. Even if you work for someone else, think of yourself as an entrepreneur;
• Become comfortable with change. It’s likely you’ll be in several careers during your lifetime, sometimes as a result of changes outside your control;
• Establish and develop a strong social networks. Connecting with people on an ongoing basis will strengthen your capacity to manage your career;
• Create and develop your own personal brand. To be marketable in the workplace, you need more than experience and an education. You are more than your job, and being able to see and promote who you are in totality, makes you more marketable;
• Establish and develop your professional reputation. It’s portable, and hugely affected by social media. A positive reputation can make or break individuals or organizations;

The following comes from The Atlantic's 2011 article "The Freelance Surge Is the Industrial Revolution of Our Time": As of 2005, one-third of our workforce participated in this "freelance economy." Data show that number has only increased over the past six years... These trends will have an enormous impact on our economy and our society:

1. We don't actually know the true composition of the new workforce. After 2005, the government stopped counting independent workers in a meaningful and accurate way. Studies have shown that the independent workforce has grown and changed significantly since then, but the government hasn't substantiated those results with a new, official count. Washington can't fix what it can't count. Since policies and budget decisions are based on data, freelancers are not being taken into account as a viable, critical component of the U.S. workforce. We're not acknowledging their prevalence and economic contributions, let alone addressing the myriad challenges they face.
2. Jobs no longer provide the protections and security that workers used to expect. The basics ­ such as health insurance, protection from unpaid wages, a retirement plan, and unemployment insurance ­ are out of reach for one-third of working Americans. Independent workers are forced to seek them elsewhere, and if they can't find or afford them, then they go without. Our current support system is based on a traditional employment model, where one worker must be tethered to one employer to receive those benefits. Given that fewer and fewer of us are working this way, it's time to build a new support system that allows for the flexible and mobile way that people are working.
3. This new, changing workforce needs to build economic security in profoundly new ways. For the new workforce, the New Deal is irrelevant. When it was passed in the 1930s, the New Deal provided workers with important protections and benefits ­ but those securities were built for a traditional employer-employee relationship. The New Deal has not evolved to include independent workers: no unemployment during lean times; no protections from age, race, and gender discrimination; no enforcement from the Department of Labor when employers don't pay; and the list goes on.

Organizational Projectification

I first heard about the word projectification in China at the 2014 IPMA Research Conference in Tianjin. There were a number of excellent papers presented dealing with differences between project management in the East and West. A presentation by Derek Yang and Yongxia Chen entitled "Projectification in a Chinese Firm" provided some interesting background on the specific topic of the projectification of organizations. At the time of their paper, the researchers found 50 papers in China on projectification and around 10 internationally. Unfortunately most of the Chinese papers, are well in Chinese, but some had been translated:       The presentation identified that the seminal paper on projectification was in 1995 by Christophe Midler, entitled "Projectification of the Firm: the Renault Case" (Scandinavian Journal of Management, 11(4):363-75, 1995). Midler defined projectification as:

A process which took place in a series of changes in the structures for organizing new product development at Renault for a 30-year period as they moved from a functional to a heavyweight project form.

The presentation is provided here: 2014 IPMA Research Conference - Projectification in a Chinese Firm - Yang The following quote comes from another exciting 2018 paper "Projectification in Western economies: A comparative study of Germany, Norway and Iceland" (Schoper et al., 2018):

With the creation of the term “projectification” in 1995 Midler foresaw a phenomenon that describes the current development in Western societies. Currently there are more than 1500 papers that deal with the observable fact that tasks are increasingly carried out in the form of projects and less as “ordinary” line work. Projects are omnipresent and happen in all parts of the society and life. However, there were only rough estimations about the extent of projects in the economy. The following study aimed to close this research gap by delivering a measure of the degree of projectification in the three countries: Germany, Norway and Iceland.

Even within corporations the following trends have taken hold (taken from the Forbes 2012 article "The End of a Job as We Know It"):

• They reward results and expertise, not position.
• They break down functional silos and facilitate work across business functions.
• They reward continuous learning and “learning agility.”
• They hire for values, innate skills, and fit, not for experience.
• They encourage and promote horizontal mobility.

The Necessity for Project Management Skills

Though a frequently used tongue-in-cheek graphic in systems development projects, its humour stems from our experience in seeing so many similar examples: Projects are becoming the new normal. We as professionals need to understand the disciplines and components of project management in order to protect the brand and maximize the organizational value and benefits while at the same time reducing cost and risk. GPM Global can help with this by providing foundational project management understanding, as well as leading sustainable project management skills and techniques such as P5.  

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