Monthly Archives: November 2014

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Robaxin uk “If you think that a fixed price contract is going to solve all your previously experienced project issues, think twice”

A fixed price contract appears to be the magic bullet to a number of project management issues, but that may only be superficial. At the end of the day, all of the project management routines still need to be flawlessly executed including the financial aspects, regardless what contract vehicle has been selected.

With a fixed priced contract the customer is making an attempt to transfer the financial risk to the vendor. The transfer is at a cost to the customer and wouldn’t exist, if the parties decided to sign a time and materials contract. The additional cost is a risk premium (cost contingency) that the vendor is adding to the base estimate that if done properly already has an effort contingency. It is quite common to see a risk premium in the 10 – 30% range on top of the base estimate and effort contingency together. So long story short, customers are paying a lot extra when they sign a fixed price contract. Is that worth the money; is that worth the delivery risk? Now, there are customers that want to know what the actual project cost to the vendor is and based on the outcome recoup part of that risk premium. Unfortunately that’s not how it woks, because the customer did not bear the delivery risk and also would not chip in extra dollars if the vendor would experience a cost overrun.

Alongside the risk premium (additional cost), the customer bears the risk that the vendor is not delivering the contracted scope with the expected quality (less business benefits). When a vendor is exposed to a fixed price deal, they are managing the project scope very tight. When the project scope is not well defined in the contract and therefore the level of ambiguity (see previous post ‘Ambiguity’) is relatively high, the project is set up for failure. Oftentimes the expectation gap cannot be closed without a project change request, which most customers do not account for in their budget when they have signed a fixed price contract. It is very likely that the gap is significant; therefore the vendor is raising many change requests over time. The relationship stress that manifests between the customer and the vendor, because of the conflict, can be detrimental to the overall trustworthiness of the parties, and when trust goes down, cost goes up, and speed goes down (see Stephen M.R.Covey, “The Speed of Trust”). As a result, the project slides into a downwards spiral triggering all different kind of consequences.

Managing a fixed price contract is asking for a different mindset from the parties than any other contract vehicle. Scope and schedule must be perceived as equally important for both parties. If not, the project is doomed to fail. There are cases where a vendor managed a fixed price contract as it was a time and materials contract. For quite awhile there was an abundance of resources and everything seemed possible (exaggerating here a little bit), but overtime when the project actuals came in and the scope verification check was completed, the vendor realized that the burn rate was way out of line, and that the only way out was raising change requests (extra dollars or scope reduction). At that point, frantic behavior should not be a surprise to anybody. It is possible that the vendor tells the customer that for certain deliverables they have exceeded the number of hours, and the customer has to pay extra. Or that rigorous testing is not required, because best practices and development standards have been followed consistently, and therefore the risk of failure is low. A customer would instinctively think: “But I have a fixed price contract for that deliverable, the requirements are clearly articulated in the contract, blueprint and specifications. We agreed to the delivery approach, what’s the problem?”

These are just a few examples of situations where a customer might end up with, if they make a fixed price deal. They need to be aware of the buyers risk of paying more (risk premium), for potentially less quality (business benefits), and potentially damage to a good relationship with the vendor, whom they may have been successful with before at other projects. What is then the alternative?

There is actually a few. Customers can simply go for a time and materials contract. There is nothing wrong with that if they manage it well. Or customers can decide to go for a hybrid model, where the basis of the contract is time and materials, with fixed price for specific, well-defined scope items. They can also consider performance-based contracts with time and materials as basis. If the intention is to transfer delivery risk to the vendor (which is a great idea and something a customer must consider), embedding performance-based incentives in the contract is a perfect alternative. More and more vendors are willing to demonstrate skin in the game.

The success of any contract vehicle comes down to the accuracy of the scope definition. Customers need to know WHAT they want (see my post ‘Continuity of Vision’) throughout the project lifecycle. They need to clearly articulate it to the vendor, and collaboratively document it meticulously in the contract. When customers are locked into a fixed price contract, discrepancies seem to be much harder to resolve than with any other contract vehicle. Customers must be mindful of the pros and cons of a fixed price contract when they consider it. Customers should not run into it, because they think they have frozen their financial baseline and they therefore only need to focus on scope and schedule. That’s an act of shortsightedness, which at a certain point in time will be proven to be wrong.

Bas de Baat

Program Manager Enterprise Applications, PMP©

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Making good decisions is a crucial skill at every level – Peter Drucker

What can you do when you need “that one decision” right now before you can move forward with a critical path item? You are already tracking behind schedule and a further delay can be lethal. You have exhausted all your creative planning and scheduling options. You know what the decison should be, have made the right recommendation a few times, but still don’t have an answer.

Making decisions can take more time than you anticipated. Making big decisions (impactful) takes courage and risk. These values are crucial for any leader and they are must haves for any project in order to be successful. But unfortunately there are leaders who, for a variety of reasons, default to risk aversion, procrastination, deflection and counter-productive behaviour. Now for the record, there are leaders who live up to these values, they are fabulous, very effective, epic performers and role models, but they seem to be more and more an exception than the rule.

Now back to the question: what can you do in these circumstances?

1 – Clearly articulate the impact – Make sure that you have prepared a decision document with options and a recommendation. Socialize the document with stakeholders who can be influential to the decision making process and build a coalition. Make sure that you have the impact of ‘not making a timely decision’ documented as well. You want to avoid that the decision maker can find an argument about lack of information. Decision makers typically have limited availability and you want to be respectful of their time

2 – Set the sense of urgency – Set the right tone by making the need for a ‘decision now’ explicitly clear. Explain to the decision maker what the risk, cost and missed benefits are if a decision is pending

3 – Escalate – Every project must have an agreed to escalation path before it starts. This has a number of reasons. One is to expedite decision making, and the other is to avoid people from being surprised when you actually do escalate. Don’t hesitate to escalate. As PM you are resonsible to deliver on time, on budget and as per specification. That means that you have the right to take corrective actions when you feel it is needed. When you do escalate make sure that it is transparent to the people involved. You want to keep trust levels up high

4 – Be bold – If it turns out that the last station on your escaltion path also doesn’t make a decision, be bold, creative and identify another end station. Keep going up the ladder and find that leader who can and wants to make the call. You would be surprised how effective that can be for not only the decision you need, but also for anything to come after.  You have found yourself an ally!

5 – Document and move on – If it turns out that there is no sight on a decision anytime soon, document all the steps that you have taken and what has been discussed along the way, with whom and when. There is a high probability that at a later time, the fact that a decision was not made, comes back as an issue. You want to make sure that you can speak to the facts instead of emotions. Share the document with the key stakeholders who have been involved. Once that’s done you are ready to move on with scope that you can deliver and implement

Good luck with getting that “one decision” made!

Bas de Baat
Program Manager Enterprise Applications, PMP©

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The key is not to prioritize what’s on your schedule, but to schedule your priorities – Stephen Covey

It seems that we are more and more dealing with ‘Competing Priorities’ on a daily basis then ever before, and as a result do not get the work done that we want to get done. Meaning we are facing a downwards spiral on our productivity. Is this a true fact or is it an excuse to better organize the work?

I think that both arguments are valid. It appears that in the world we are living today, much more options are available to decision makers than in  the times where technology was not a major influencer. And if you look at technology in general, we really have just started, knowing that we are in the early adopter phase of mobile solutions, big data and analytics, wearable gadgets, the internet-of-things, and robot technology. Having said all of that, there are no excuses for not doing a much better job on organizing the work. Procrastination, power and politics, are examples of drivers that work counter productive in getting things done. But the most important driver in my mind is that we are not effective enough in consistently prioritizing the work according to the goals we want to achieve. And that activity is fully in our control, compared to the other two. How can we change that?

First of all, what is a priority? According to Google a priority is defined as a thing that is regarded as more important than another. It suggests that there is some kind of ranking happening based on certain conditions.

One of the things we can do is to change our behaviour by taking a structured and pro-active approach by becoming a better planner! It has been proven that people, teams and organizations who spend a serious amount of time on planning are ultimately more effective in attracting what they want. Planning is a routine activity and starts with defining and prioritizing goals and scope. Once you have done that including proper communication to stakeholders you have made the most important step on your way to a new, future state. Planning is an iterative and repetitive process. The process itself can be more important than the outcome itself. The fact that you are consciously thinking about what you want to achieve is major. Planning is like a perpetual mobile, it never steps and if you do it well has the same rhythm.

Before you can set the right priority, you must have alignment and commitment from the stakeholders on the vision, goals and scope of work. Alignment means that everybody who is impacted, agrees with what is going to be done and why. Commitment means that everybody who is impacted, has the will power to make it happen.

There are a number of models that you can use to prioritize the work. Without going into detail, most of them are based on a combination of qualitative and quantitative argumentation. Or in other words, what are the cost and benefits to do first and that later? A pragmatic approach is to  categorize things as high, medium and low. Or the Moscow model: Must have, Should have, Could have, Won’t have. Problem is that these models can quickly become a biased and subjective approach. Something that is high for you, can be low for someone else. What it comes down to, is that in order to prioritize the work, you need agreement on what the selection criteria are. Depending on the complexity of the work, you want to make a choice between a simplistic or more comprehensive approach.

Another dynamic that tends to derail our work prioritization and therefore our productivity is information overload. If have seen organizations spinning on prioritizing work, because overtime the items were discussed, new information was brought forward. Most of the times, the new information was irrelevant and did not change the foundation for stakeholders to make decisions. A successful leader is able to make the right decision and set the right priority based on a limited set of information. What it means is that the leader is taking risk, and in some industry sectors that kind of behaviour is not stimulated.

If you look at all of the above, if you want to be effective and get things done, as an individual, team or organization, you must be aware of where you want to go and the conditions that ultimately help you or not. Make sure that you shift your mind set to one where you are capable of defining what you want and remove the conditions that are roadblocks. This requires a change that takes time. For teams and organizations it means a cultural change. External expertise may be required to make that change happen. For an individual it can become a mental and spiritual change. To make that mental change, you may want to practice the art of planning the work over and over again until it becomes a habit. To make a spiritual change, the art of meditation is very effective.

Once you have figured out what you want to achieve with the right priority, the only that is left is to stay focused and dedicated to the plan and intended outcome. Stick to the plan and keep it up to par as new situations arises, or vision, goals and scope of work changes. Make planning a routine and always try to be a step ahead of the game.

Bas de Baat
Program Manager Enterprise Applications, PMP©

 

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“Some people want it to happen, some wish it would happen, others make it happen” – Michael Jordan

How does a great project leader Make Things Happen? 

To lead projects to success, there are 7 factors that you need to be mindful of:

  1. Awareness
  2. Aspiration
  3. Ability
  4. Alteration
  5. Action
  6. Alertness
  7. Achievement

AWARENESS is the first factor. Organizations who ultimately manifest their goals through projects have a high level of awareness. They understand their business context, strengths, weaknesses and constraints. They have a well-articulated vision, have made choices on what to do, what not to do and know how to get there. They have assigned a project leader who in tandem with the visionary leader (see one of my previous posts) is set up for success by the sponsor.

The second factor is ASPIRATION. High performing teams that make things happen thrive on ambition. They deliver a new, top quality product and/or service, because the people who make up the team are committed and intrinsically motivated to be part of a game changing journey. Daniel H. Pink, a well-known author of books about business, work and management, says that motivation is coming from the inside. Autonomy, Mastery and Purpose are the new 21st century ingredients for leadership.

ABILITY to deliver is the third factor. A project leader’s primary responsibility is to build a team that is able to deliver results. What does ability mean? Think about values like: talent, skills, expertise, knowledge, patience, perseverance, leniency, capacity, mastery, cleverness, far-sightedness, keen and flexibility. The project leader is responsible to acquire the right mix of professionals and unlock, extend and apply their talents in order to meet the purpose of the project and career ambitions of the individuals. A great project leader is a great coach at the same time.

ALTERATION is the fourth factor. In order to reach the future end state that is intended to be substantially different and better than today, the organization must change. John P. Kotter, Professor at Harvard Business School and best-selling author, says that the key aspect of triggering that change is to establish a sense of urgency. Change leadership is a responsibility of the visionary leader and the project leader. Where the visionary leader is more focused on shaping and communicating the vision, the project leader is keen on embedding change in the organization by transforming people, process and technology in an integrated manner.

The fifth factor is ACTION. A project leader who wants to meet the purpose (vision, goals, objectives) of the project, has an action plan to get to the future state. He understands the vision (WHAT) and knows the primary and secondary pathways (HOW) to follow. During the execution phase everything that the project does is based on a well-communicated action-oriented-plan. Project performance is measured against the plan that is owned by all the key stakeholders. A successful plan has many layers of detail. At the executive level it is sufficient to have a ‘plan-on-a-single-page’ representing major work streams and key milestones. At the project level, the leader maintains a work package driven plan that can be broken down in many team level work plans. The lower you go, the shorter the horizon of the plans.

ALERTNESS is the sixth factor. Top performing project leaders implement a highly effective alert system into their day-to-day operations that avoid the project from derailment. These alerts are going beyond the common performance reporting mechanisms. The best alerts the project leader can receive, are obtained through verbal communications with many different stakeholders. The ability to build trustworthy relationships is therefore a critical skill for the project leader, because valuable alerts only come from trusted sources. Another key value besides trust is creativity. Once the project leader receives an alert, an instant response is oftentimes required. The ability to quickly propose alternatives to the right decision makers is at that point in time very important to keep things moving forward.

The seventh and last factor is ACHIEVEMENT. There are a number of things that are very important when project results come in: celebration, sustainment and continuous improvement are the key ones. Successes must be celebrated. Top project leaders create a positive, motiving and inspiring work climate where people deliver results that they can feel proud of. Empowerment, ownership, acknowledgement and affirmation are core ingredients of such an environment. Realistic project plans have quick wins that enable the creation of a project culture with a winner’s mentality where top talent wants to deliver, share and develop the best of the best. The other aspect of Achievement is sustainment. Projects deliver a new product and/or service that must be supported. Part of the achievement process is to ensure that the organization has the required sustainment capacity. The transition planning of capabilities is a joined effort of the project and business operations. Last but not least, continuous improvement (Kaizen). Organizations that are on an evolutionary path of prolonged change and who are successful in achieving goals over and over again oftentimes have a learning capability build into their organizational culture and project approach. Learning is being perceived as an investment and not as an expense. Great project leaders coach top talented professionals throughout the project lifecycle because they care for the organization, the team and foremost the people.

 

Bas de Baat
Program Manager Enterprise Applications, PMP©

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Great coaches help to create a culture that unleashes the highest talents and diverse skills and contributions of people. The mindset of a mediocre leader is “My job is to micromanage and control my people to get results.” The mindset of a great leader is “My job is to release the talent, passion and ingenuity of all our people.” Most individuals underestimate their own talents. As a coach you need to know how to help people tap into the unique store of talents and strengths they already have – Michael K. Simpson

Michael Simpson is the author of the book ‘Unlocking Potential’. If you believe that coaching top talent is a core element of leadership of the 21st century, then I recommend reading this book.


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‘Working hard and working smart sometimes can be two different things’ – Byron Dorgan

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A Pragmatic Project Leader is keen on working SMART. Leading IT business transformation projects can be demanding at times and you often have to keep many balls in the air at the same time. Day in and day out you are operating like a juggler who is skilled in keeping several objects in motion. Working HARD is not necessarily the right answer to deliver best value to your stakeholders. Many people associate working HARD with working long hours. Oftentimes if you look at how HARD working people manage themselves through the day, you notice that there is room for improvement.

What does SMART Project Leadership mean? It is a different SMART that most of us would think about initially. Specific, Measurable Attainable, Realistic and Time-bound? As much as that is very useful for defining goals, SMART Project Leadership is a bit different.

SMART in that context means: Simple, Meaningful, Aspirational, Result-oriented and Time-sensitive.

In the 1960, the US Navy came forward with a well-known design principle: “Keep it simple, stupid”. I am a big fan of that principle and apply that to my leadership style every day. Why would you complify your thinking, words and actions when the initiative that you are leading is already demanding enough? People and organizations have a tendency towards exploiting their knowledge and experience to levels that are most of the times not required to complete a particular task. A key contribution of the Pragmatic Project Leader is to bring things back to reality and a major enabler to do that is to simplify the problem and context. By doing so, you bring people back where they need to be, back to a situation where they can be productive and can deliver.

Thoughts, words and actions need to be meaningful otherwise there is no value in pursuing them. In a project environment they can only be meaningful if they contribute to the project goals. Everything you do in a project must at the end of they day positively influence the outcome. Successful Project Leaders understand that and make that happen by demonstrating the right behaviour and taking corrective actions as required.

Projects are about delivering a unique product or service in a certain time line. When you start a new initiative, there is a high level understanding of what the project is about. Let’s call that a dream or vision. There is a high level of ambiguity and a strong desire to make a change. The Visionary Leader is they key person to communicate what that future looks like, and the Pragmatic Project Leader is shaping the path towards it. He has the plan to make-things-happen. Both are (must be) very aspirational in their behaviour to get the commitment and alignment of the key stakeholders as well as the project team. That aspiration, that high level of ambition and positive attitude towards change is crucial.

Pragmatic Project Leaders are result-oriented and realize value for the organization though practical, structured, well thought-through and well communicated plans and actions. The focus on getting results is well balanced with managing people. If there is an imbalance, there is a significant risk that the team does not have enduring and sustainable performance.

Time-sensitivity is another key dimension. A good example of this is work prioritization. The Pragmatic Project Leader has the plan to get to the future state and knows best what’s important at any point in time. Sharing that insight with the project team and key stakeholders by clearly articulating what the best order is of events and why, is a major contribution to overall project success.

Working HARD at times, when it is needed is a good thing. When the project is going through peak times, working HARD makes a lot of sense. Putting in the required hours and going the extra mile is what’s being expected then. Consistently working SMART is what you are really after. If you make that a centre piece of your daily approach to work, your clients will be very appreciative.

Bas de Baat

Program Manager Enterprise Applications, PMP©